Can a bankruptcy hold up a settlement case?

Question

Had a stroke due to prolonged use of hormone therapy.

James Chandler · Answer

Yes,  the trustee could ask you to pay the money to him/her.

Stephen Lombardi · Answer

Personal injury claims are affected when the accident happens  before  you file a bankruptcy petition and thus require special handling. We’ve   been working with bankruptcy trustees for a little under thirty years to   preserve value for the injured person while pursuing the claim for the   bankruptcy trustee. We invite inquiries from either the injured party or the   trustee who would like an Iowa personal injury attorney to assist with pursuing   a personal injury claim or workers  compensation claim. So let’s talk  about how  these are normally handled.   First  if you are the injured person or their guardian (parent or spouse)  and the  person injured intends to file for bankruptcy protection, call me  before you  file. I may be able to counsel you about how to avoid filing and  preserving your  case. But if you’ve already filed a petition for bankruptcy,  don’t fret about  it, but still call me so we can discuss how to maximize  your  claim.  Understand  that after you file the bankruptcy petition you no longer  control the claim  because you don’t own it, the bankruptcy estate owns it. But  that won’t mean you  don’t get any part of the settlement or award; you can,  but only if you handle  it properly.   The  biggest problems that I see are people who think they don’t have  disclosed the  personal injury claim as one of their assets when they declare  what property  they own. You do and the personal injury claims is an asset.  Therefore it does  need to be disclosed in your bankruptcy documents both to  your lawyer and in  what you file in the bankruptcy court; that way your  creditors and the trustee  will be aware of it and will have the option to waive  any claim against it.    I  can’t stress enough how important this is. If you file the personal  injury claim  after filing a petition for bankruptcy you are not the real party  in interest  and the district court will dismiss your claim. If that happens  after the  statute of limitations runs you claim is dead as a door nail and  worthless.    So  pay attention to what I’m saying.

Mark T. Peters · Answer

If it is your case and your settlement, it may belong to the trustee. You need to talk with your bankruptcy attorney about it.

William Andrews · Answer

Yes, a bankruptcy filing can delay settlement or payout of your case. I presume the BK was filed by the company that made the hormone that you were taking and which caused you to have a stroke, which would be the defendant in your case. Then, yes, it will delay settlement / payout of your case.

Michael O'Leary · Answer

Assuming that you are talking about a Chapter 7 bankruptcy, it would "hold up" the settlement of the personal injury case only marginally. Your Chapter 7 Trustee would have to bring on a motion in Bankruptcy Court to approve any proposed State Court settlement of the claim, which would result in a delay of a month or two, tops. You must understand, though, that your personal injury claim is an asset of your bankruptcy estate that is being administered by your Trustee, and the non-exempt portion of your settlement funds will remain in your Trustee's hands and be distributed to your creditors. As the interface between bankruptcy and litigation claims is somewhat involved, you should further discuss this matter with competent bankruptcy counsel.

John Moffa · Answer

If you filed a bankruptcy case then the case/lawsuit does not belong to you to settle. It belongs to either the Chapter 7 Trustee (Chapter 7 Estate) or the Chapter 11 or 13 estate and that lawsuit/settlement money will be used to pay creditors and does not belong to you. Your bankruptcy attorney should have made this clear and your medical malpractice attorney cannot settle the case without bankruptcy court approval. So, the answer to your question is that there can be no settlement without Court approval and the settlement money is not yours unless an exemption applies. It is imperative you talk to your bankruptcy attorney. It might have been a mistake to file for bankruptcy if you did.

James Eugene Hasser · Answer

Bankruptcy can screw everything up if it's not handled right and coordinated between the bankruptcy lawyer and the personal injury lawyer. Tell both of them about the other and hopefully, they can get it straightened out for you.

Craig Burnett · Answer

It might. If you are the claimant, your case would be considered an asset of your bankruptcy estate. Unless you can exempt it or compel its abandonment, your claim may be pursued by your bankruptcy trustee on behalf of your creditors.

Marjorie Guymon · Answer

It depends on what you mean by settlement. If there is a court order approving the settlement and the order does not provide for any events of default then yes. However, if you failed to abide by the terms of the settlement and defaulted and the settlement order provides for what happens in that case, then that is the deal you made. A chapter 7 bankruptcy can discharge most settlements/orders.

Dorothy Bunce · Answer

Sure, depending on the context. If the suit is against the debtor, the automatic stay would need to be lifted to proceed. If the suit is by the debtor, you need to determine if the proceeds of the suit belong to the debtor, to the bankruptcy estate, or are shared.

NA hordjc@yahoo.com · Answer

A bankruptcy can hold up a personal injury settlement, until court approval of the settlement has been obtained. Court approval is required in order to determine how much of the settlement can be claimed as exempt property, extent of any liens on the proceeds (such as medical bills), amount of attorneys fees, and other legal issues pertaining to the settlement. Once these issues are resolved, the settlement can then go through.

Deborah F. Bowinski · Answer

Hopefully, you listed your claim as an asset in your bankruptcy case, and hopefully, you properly claimed any exemptions for it that you may be entitled to claim. If you did not, then you may have lost the right to receive any settlement proceeds. If you have a bankruptcy lawyer you should address your questions to him or her. If you so not have a bankruptcy lawyer, you may want to consult with one now.

Paul Whitfield · Answer

Bankruptcy judge can do about anything. he wants you to have assets to pay bills. Why don't you ask a bankruptcy lawyer and ask him to review your situation.

Daniel Garner · Answer

Any potential claim you have against anyone else must be reported as a potential asset if you file bankruptcy. There are exemptions you could use to protect somewhere between $10,000 and $20,000 of the settlement you might get, but any amount you receive in excess of your available exemptions would have to be turned over to the bankruptcy trustee. This is not altogether a bad thing for you. A trustee likely has more resources than you to pursue a bigger settlement if s/he believes the claim is worth pursuing. If the trustee does not believe it is worthwhile, however, s/he could abandon it as an asset and leave you free to get whatever you can. In any case, a bankruptcy is not likely to delay your settlement significantly. But if your settlement could be a very substantial amount, you might want to wait and see what you get to determine if you could pay off all your debts and not have to file bankruptcy. For most people, it should be a last resort.

Edwin K. Niles · Answer

If you have a pending claim, that claim may be considered an asset of the bankruptcy estate, and any recovery may go to the creditors.

Georges Shers · Answer

No court action can occur once a petition for bankruptcy has been filed. The parties can still discuss settlement and even reach one, but the court can not approve it.

Andrew Velonis · Answer

It can, but usually not by much: the Trustee will agree to have the personal injury lawyer appointed as "special counsel" and the case goes on. But you need to consult with a bankruptcy lawyer about the implications of what will happen to the money if the case is successful.

Ronald A. Steinberg · Answer

Whose bankruptcy? If it is the drug manufacturer, it will, because of the deductible amount it has to pay out of pocket.

Kristoffer Sperry · Answer

If you have a pending lawsuit or cause of action that occurred prior to filing then that suit becomes property of your estate and the trustee assumes the right to settle or litigate it. The trustee may decide not to pursue it and return the suit back to you.

Dennis Pennington · Answer

Always. Your settlement would become property of the bankruptcy trustee.

Stuart Nachbar · Answer

If a Bankruptcy was filed while the claim was pending, and not settled, and you are now settling same, unless you have exempted out more than the settlement value and the Trustee has abandoned his interest in the claim, and the time for objecting to Exemptions has passed, then you should give the Trustee notice and yes it can delay the case.

William Bidwell · Answer

No, it will not interfere with a settlement. A settlement or award for personal injury is not included in the bankruptcy estate.

Mark Cherry · Answer

Yes. You must disclose any lawsuits  as well as any right to file a lawsuit in your Bankruptcy. A trustee may claim the proceeds as funds for the creditors or may abandon the trustees interest. You must make sure you discuss this factor with your bankruptcy attorney prior to filing.

Richard Peacock · Answer

In SC, generally, if a Defendant declares bankruptcy during the pendency of a legal action, the legal action is stayed until the bankruptcy is concluded.

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