Bankruptcy trustee may determine outcome of your pending injury claims case

By Barbara Craig, Attorney at Law

Because a pending injury claim case is part of your bankruptcy estate, the bankruptcy trustee has two options with regard to the injury claim. The trustee may decide to either pursue the claim or abandon it.

First, the trustee will investigate the claim and decide the potential value of it. If the trustee decides the case has merit and value, the trustee may demand payment from the person or company who caused your injury. If the demand is not paid, the trustee may retain an attorney on your behalf to pursue litigation, if you have not already done so. But if you are already working with an attorney, the trustee will most often continue to utilize your attorney.

If the bankruptcy trustee litigates your injury claim

injury claims bankruptcy If your case is already in litigation or the trustee initiates litigation, the trustee is in charge of the case. Most often, the trustee oversees the case while you and your attorney work out the details, but the trustee has the option to be more hands-on. The trustee can pursue settlements, subject to court approval.

The settlement that the trustee seeks may be less than the potential value of your case. The trustee’s duty does not require that he consider what is in your best interest. So he only needs to make sure that the settlement is enough to cover the cost of litigation, any exempt amount that you would retain, the amount which will be paid to your creditors, plus the trustee’s fees.

If the trustee obtains a money judgment or settlement on your behalf, the trustee supervises the payments to the appropriate parties. If there is anything left over after these payments, the remaining funds will go back to you.

If the bankruptcy trustee abandons your injury claim

A trustee would abandon an injury claim if the he believes the injury claim is difficult to prove, expensive to pursue, or is not likely to result in significant funds to distribute to your creditors.

If the trustee decides to abandon, the claim would again be yours and any compensation received from it would be yours to keep.

How to file bankruptcy and protect your injury claim case

So how do you file bankruptcy while still maintaining your rights in an injury claim case? Discussing the case in detail with your bankruptcy attorney is extremely important, as your attorney must make sure it is correctly included it in your petition.

If you already have an attorney in your injury claims case, you should also make that attorney gets a copy of the bankruptcy petition and is kept up-to-date on developments with your filing. Keep all of your documentation in order, so if you are asked to submit any paperwork to the bankruptcy trustee, you can do so in a timely manner.

There are many potential road blocks to bankruptcy and an injury claim case can be a major complication which should be discussed with an experienced bankruptcy attorney.

Do you have questions about filing for bankruptcy with a pending injury claims case? Contact Bankruptcy Attorney Barbara Craig to schedule a free consultation. Serving clients in the South Bay area including Torrance, San Pedro, Lomita, Harbor City, Carson, Wilmington, Long Beach and other nearby communities.

Illustration courtesy cooldesign