The disbursement of settlement proceeds may be significantly impacted for individuals who have filed personal injury claims before filing for bankruptcy or throughout an open bankruptcy unless they take certain steps to preserve their settlement funds. Taking the following steps can help ensure that individuals have more control over their settlements, preventing unwanted circumstances from negatively affecting them.
Communicating with Attorneys
Individuals should inform their bankruptcy attorneys about whether or not they’ve ever had a bankruptcy, regardless of its status, and the bankruptcy attorney should be informed about any claims in process or settlements awarded. Attorneys can provide more guidance and advice if they are aware of all of the details.
Disclose Settlements to Trustees
Bankruptcy trustees should also be made aware of any settlements. Some individuals may try to hide settlements from trustees by simply not disclosing them, but trustees often look into their records following the closure of a bankruptcy case. More often than not, trustees can still pursue settlements even years after discovering them.
Connect Personal Injury Lawyers with Bankruptcy Attorneys
Because of their specific area of expertise, personal injury lawyers may not be aware of all of the bankruptcy laws and exemptions that apply to specific settlement situations. The best way to avoid potential complications is to make sure that both the personal injury attorney and bankruptcy lawyer can provide each other with accurate and up-to-date information.
Consider the Various Exemptions Available
In some cases, personal injury settlements may be exempt from bankruptcy estate assets and certain federal exemptions may allow individuals to keep some or all of their settlement proceeds. To facilitate this, bankruptcy attorneys are required to claim exemptions, as they won’t automatically apply to any case.
Hire a Settlement Planner to Further Assist with Communications
A reputable settlement planner is also able to provide individuals with more information regarding settlement options while working with both personal injury attorneys and bankruptcy lawyers to further protect settlement awards.
Keeping these steps in mind can help ensure that proceeds remain in the hands of the original recipient. Ultimately, it’s best to make sure that individuals and their attorneys are able to work together to secure the most favorable outcome.