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How can I protect my lawsuit winnings of $15,000+ when filing chapter 7 bankruptcy due to loss of my job?

Milwaukee, WI |

I was wrongfully terminated and according to a few lawyers I have met with they say I have a very strong case against this company for Medicare fraud, abuse of residents rights in a nursing home, failure to offer FMLA, fired when on medical leave from a workplace injury. I was fired 2 months ago and ready to hire the lawyer for this case; however, because of lost income I had to file chapter 7 bankruptcy and my home is at risk of foreclosure. This past Monday I hired and signed the papers to file bankruptcy and try to save my home from foreclosure.
Should I worry that my winnings (if won in my favor) will be taken by any of the collection agencies for past due credit card debt?
And only if in the end I can not save my home and it is foreclosed will they also take money won?

Attorney Answers 3

  1. Best answer

    If I understand your post correctly, you are seeking to protect FUTURE, POSSIBLE lawsuit awards (i.e., you haven't been awarded anything yet)? If that's the case, that award will be an asset of your bankruptcy estate. It is possible to exempt some of it via the "wildcard" exemption (assuming federal exemptions are used, which is possible in WI), but there is no overall exemption for an award involving wrongful termination - it is not classified as "personal injury" or "pain and suffering," so I highly doubt you can protect all of it. If you file bankruptcy, your creditors won't directly sue you and take your money - they will be paid from anything the bankruptcy estate generates. And, once you file bankruptcy, you cannot take it back. If you cannot keep the house, the house will be gone as will all of the non-exempt lawsuit award. Your attorney needs to explain this to you in detail.

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  2. I am guessing you hired someone to fill out the forms for you, and not an attorney. Chapter 7 is not typically used to save a home from foreclosure, as you must be current on the home to assure that you can keep it in a chapter 7. So you probably should be in a chapter 13. To address your question, you list several issues. I do not think medicare fraud or patient abuse would bring you anything personally. It sounds like you would be bringing a worker's compensation claim which you should have listed as an asset on schedule B and exempted on schedule C pursuant section 522(d)(11)(E). If you did not do so, you should amend. But you are also foolish if you do not have a bankruptcy attorney assisting you. By filing what you did under oath, you have jeopardized your claim. Courts have held that by swearing there was no claim against your employer (you did not list it, therefore it did not exist), you are barred from later saying there was one.

  3. Potential recovery in a lawsuit is an asset that must be disclosed on Schedule B of the bankruptcy petition. You must schedule the asset and even if you list the value of the assets as "unknown" you must claim whatever applicable exemptions, wildcard or other, that may be available. Otherwise, your recovery is not your property, it is part of the bankruptcy estate, subject to administration by the trustee.

    You must amend your petition. Do not go to the creditors meeting without taking care of this.

    Bankruptcy filings require that all assets, income and debt be fully, truthfully and accurately disclosed. Failure to comply can result in a motion to deny discharge under U.S. Bankruptcy Code Sections 523 and/or 727.

    Here is an article on bankruptcy basics:

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