Can a bankrupcy court take money that is awarded to you from a personal injury lawsuit after you have filed bankruptcy?

Asked over 5 years ago - Chicago, IL

I'm 38yrs old and have two small children and going through a divorce. I'm 40,000 in credit card debt mostly due to my ex-husband. The cards were all in my name not his. What would be a better option bankruptcy or debt settelement? One card offered to reduce a 13,000 debt to 4,500, however i would have to pay it off in 4 months. Also I have a personal injury lawsuit in chicago pending if Im awarded money can the bankruptcy court take this from me? I woukd like to use the money to buy a house for me and my children in the next 5yrs. I'm on disabilty and work 2 day per week, my monthly income is 2,200. 1,300 of that is from disabilty. Thank you, any advice would be helpful.

Attorney answers (3)

  1. Mazyar Malek Hedayat

    Contributor Level 13

    Answered . Your question has to do with funds received after the filing of a bankruptcy case. In this case you've asked about a personal injury award in your favor. This question has 2 clear answers:

    To begin with, keep in mind that your bankruptcy estate consists of everything you had at the time of filing as well as anything that follows from pre-filing events. In this case, if you were injured before you filed and were awarded damages afterwards (maybe even after the case was discharged) then the award will be part of your estate.

    Assuming the personal injury award is part of your bankruptcy estate, can you keep it as "exempt"? Well, in Illinois you can keep up to $15,000 of such an award ($30,000 in the case of joint debtors).

    I hope this information has been helpful. Feel free to contact our office with any additional questions or follow up.

  2. Jeffrey Daniel Larkin

    Contributor Level 15

    Answered . While I am not licensed in IL, it looks like you can exempt $15,000 from your personal injury case unless it is a wrongful death case in which you can exempt the amount "reasonably necessary for you and your dependents support." It's tough to say what's best for you without having a general idea of how much you expect to receive in the lawsuit. If your settlement is close to this amount, my advice is to wait to file the bankruptcy until you can spend down any non-exempt amount of the settlement on general living expenses.

    LEGAL DISCLAIMER
    Mr. Larkin is licensed to practice law in CA and is located in San Diego. His response here does not constitute legal advice and does not create an attorney/ client relationship. The response is in the form of legal education and is intended to provide general information about the matter in question. Many times the questioner may leave out details which would make the reply unsuitable. Mr. Larkin strongly advises the questioner to confer with an attorney in their own state to acquire more information about the specifics of their case.

  3. Elizabeth Taylor Herd

    Pro

    Contributor Level 19

    Answered . I am not licensed in IL and do not practice in the area of bankruptcy. I can offer you only general advice. Your bankruptcy attorney and the bankruptcy trustee need to be aware of your lawsuit. It may be viewed as an asset and the trustee has an interest in any asset. Notify your lawyer about the filing immediately.

    Betsey Herd
    Tampa, Florida

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