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 you, for the bankruptcy trustee and for your creditors. So let’s talk about how these are normally handled and why a personal injury claim requires special handling.

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.

WHO IS THE REAL PARTY IN INTEREST?  

Every personal injury claim must be filed in the name of the real party in interest. This means for the benefit of the injured person, not someone that doesn’t own the claim. You have to own the claim to be a real party in interest.

Understand that after you file the bankruptcy petition you no longer own or have the right to control the claim because you don’t own it, the bankruptcy estate owns it. But that won’t mean you won’t get any part of the settlement or award; you can, but only if you handle it properly.

WHAT ABOUT THOSE DOCUMENTS YOU FILED IN THE BANKRUPTCY CASE?

The biggest problems that I see are people who think they don’t have to 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 which can be quite valuable. 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.

MAYBE THEY WILL NEVR FIND OUT ABOUT IT!

There are two problems with this statement, one civil and one criminal. First if you fail to disclose all your assets in the bankruptcy case you are committing criminal and civil fraud. That can result in criminal charges being filed against you and having your bankruptcy case dismissed.

Then if in the personal injury case the defense attorney figures out you filed for bankruptcy they will move to dismiss your personal injury claim, asserting the trustee is the real party in interest, not you. 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.

CONCLUSION

So pay attention to what I’m’ saying. If you have a P.I. claim and then file for bankruptcy call me so I can negotiate you into the claim. I’ve used certain legal strategies for over thirty years and have never once not been able to provide a check to the injured person EVEN AFTER FILING FOR BANKRUPTCY.

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. Don’t be the first who didn’t get one – call me. 515-222-1110

Steve Lombardi
Iowa personal injury, workers' compensation, motorcycle, quadriplegic, paraplegic, brain injury, death
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