In today’s economy some hard working men and women are forced to seek bankrupcy protection in order to restructure their debts and, in some cases, get a fresh financial start.
In cases where an injured motorist or passenger files bankruptcy, they are no longer permitted under federal Bankruptcy law to settle their personal injury case. The Bankruptcy Code defines property of a debtor’s estate to inlude all legal and equitable interest in property as of the commencement of the bankruptcy case. This includes any claim for personal injuries.
This means that if you are injured prior to filing bankruptcy, the bankruptcy trustee is the person with the authority to settle your personal injury case.
In one case, for example, an injured motorist settled with the at-fault driver’s insurance carrier for $15,000 and signed a full release of claims against the at fault driver and the carrier. The motorist did not tell the carrier that he had filed for bankruptcy protection.
The judge ruled that the release was without any legal import, although the carrier would receive a credit for the $15,000 paid. The injured motorist had to turn the money over to the trustee.