If you have ever been in an accident where there was property damage or personal injury you are familiar with the fright of not knowing what happens next. The big concerns over how you recover and get back into the routine of your life occupy every moment of your life as you try to figure out what to do. When the accident was the fault of another, the situation becomes worse as insurance companies are involved, and your case can take a long time to reach a resolution. Sadly, when it is someone else’s fault minor concerns often become major problems as most people seek to avoid responsibility, and you are often left taking care of yourself. What happens if someone files bankruptcy to protect themselves from paying out a court ordered judgment?
No two accidents are exactly alike and in most cases a judge will decide the outcome of the awards whether it is in an actual court or through some mediation agreement. In the representation of the injured, attorneys will often sue everyone possible to try and recoup damages for their client. When there are insurance companies involved the cases can either drag out or be settled extremely quickly depending on the circumstances. If the insurance company thinks there is a slam dunk case and that a judge will award a very high judgment against the insured they will move quickly to settle and try to keep the costs out of court. If the insurance company thinks they have a case or that you are unable to sustain the high costs of legal fees they will drag out a case to leverage the situation to their benefit.
Unfortunately, even in high dollar awards, the insurance company does not always have to pay. Depending on the type of insurance policy, there is a cap on damages that the insurance has agreed to pay. When the judgment is awarded, the insurance pays their portion of the balance, and it is up to you to try and collect from the person who is at fault for the incident.
State Law Protections
There are several ways the state and federal government provide protections to you the injured, but also to the guilty party. If an individual injures you and is court ordered to pay damages, there is a judgment issued or some form of a court order. While the court may issue a judgment for damages, that does not mean you are going to have a check waiting for you when you leave the courtroom. In Florida, you have to have the judgment clerk certified and recorded in the public records. By certifying the judgment and recording it you have given notice to the public through legal means that the individual owes you money. If the individual sold any real property, the judgment awarded to you by the court would have to be satisfied with any funds leftover after any other liens of priority have been taken care of.
For the party that has been ordered to pay damages, the state does protect their homestead. What that means is that if you have a judgment in your favor and you seek to have the court enforce the judgment you cannot take away their home. There are ways to get around this, but it is complicated and requires serious work by attorneys who may or may not come away with a victory in court. If you do win, the other party may try and hide in bankruptcy court.
Whenever someone files bankruptcy anyone who would bring a lawsuit against them would have to do so in a bankruptcy court. Filing a bankruptcy puts all lien holders and creditors on notice that they cannot pursue collections and that they must enter a lawsuit to have their debts upheld by the court for good cause. Bankruptcy courts also protect homestead property in most cases unless there is fraud or behavior that can remove the homestead protection.
Bankruptcy is a very complicated part of the federal law and gets even more complicated as there are several different types of bankruptcy. Depending on the chapter filed under, a 7, 11, 13 or any other chapter will determine the outcome of your interests in the judgment. There is no clear-cut answer as to the issue of a bankruptcy filing protecting your interests and upholding the injury damages awarded by a different court. Once the filing of bankruptcy occurs, a trustee or magistrate will be assigned who will take an exhaustive look at the petitioner’s finances and holdings to determine what should be restricted. If there is enough property to sell and settle judgments at lower costs, the court will decide what survives and what doesn’t according to law. It is quite possible that the one person who already hurt you in an accident will injure you again through a bankruptcy court.
To help offset this, make sure you have a qualified personal injury attorney who will fight every step of the way to make you whole again. Lawyers like David Heil are a good bet (for example).
The writer of this article, Ray Donato, is an experienced paralegal who writes on the side to help others grasp complicated legal topics and understand their rights under the law. If you wish to learn more about Ray you can visit his profile on Google+.