Whether you can keep the money you haven’t received yet, but are likely to depend on which state that you live in. Since the personal injury happened before filing bankruptcy, any settlement received becomes part of your bankruptcy estate. How much you are allowed to keep depends on the exemptions available to you in the state where you live. In a Texas Bankruptcy, debtors can utilize either Texas bankruptcy exemptions or federal exemptions.
Personal Injury and Bankruptcy in Texas
Because Texas doesn’t have a personal injury emptions or a wild card exemptions, you may want to rely on utilizing the US Bankruptcy Federal Exemptions instead. If you decide that it is in your best interest to claim federal exemption versus those of Texas Bankruptcy rules, you can exempt and save up to $23,675 from personal injury awards, not including pecuniary loss or pain and suffering. Any amount that exceeds this amount will be paid to the bankruptcy trustee to be dispersed among your creditors.
Disclose all Potential Lawsuits
The decision to settle a personal injury case first or wait until after bankruptcy is one that relies solely on your personal debt situation, as well as, how much your potential lawsuit is worth. With a particularly large settlement, you may try and attempt to negotiate with your creditors before filing bankruptcy. If you have lawsuits that haven’t been filed, but will, they must be disclosed to courts. Failure to declare pending lawsuit money holds serious ramifications for your bankruptcy case.
If you’re struggling with debt, but also have income or will receive a sizable personal injury claim, you need an experienced bankruptcy attorney in Dallas that specializes in both state and Federal Bankruptcy law. A personal injury lawyer most likely won’t have the extensive knowledge of local bankruptcy rules and guidelines for your bankruptcy district.