Imagine experiencing severe injuries from an accident, persevering through the legal process, and finally winning a lawsuit. Unfortunately, you're still struggling financially and have no other option but to file for bankruptcy. But just as you're preparing to file, you have an important question: will bankruptcy affect your personal injury award?
If you're in this situation, it’s important to know that bankruptcy doesn’t necessarily affect the personal injury award, but it can be bit complicated. In this post, we’ll provide information that can help explain how a bankruptcy can affect a personal injury award.
You Can Exempt a Personal Injury Award from Bankruptcy
The good news is that in California, you can usually protect your personal injury award if you're considering filing for bankruptcy. The reason is that in California, personal injury awards are exempt from bankruptcy proceedings. This means that the bankruptcy trustee is prohibited from taking your personal injury money as long as you qualify to exempt it.
However, there are some exceptions to this rule. For example, if you received your personal injury award after you filed for bankruptcy, the award may be considered part of the bankruptcy estate. In that scenario, the bankruptcy trustee may be able to access some or all of your award to pay your creditors.
Another situation in which your personal injury award may not be exempt is if you receive your award via a structured settlement. In California, if you receive your award through a structured settlement, the payments may not be fully exempt from bankruptcy proceedings. However, depending on the timing and amount of the payments, you may be able to exempt at least some of the payments.
Contact a Lawyer for Bankruptcy Guidance
if you're considering bankruptcy and have received or are about to receive a personal injury award, it's important to consult with an experienced bankruptcy attorney who can help you navigate the complex laws and regulations surrounding bankruptcy and personal injury awards. Your attorney can work with you to create a plan that protects your award to the greatest extent possible.
With the right guidance and planning, you can successfully navigate the bankruptcy process and take advantage of the exemptions for which you may qualify.
We at Nguyen Law Group are here to help. Contact us online now to request a free consultation.