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How will a chapter 7 affect a pending lawsuit from an auto accident?

Tucker, GA |

I was involved in an auot accident in December and will be filing a Chapter 7 in the next few weeks. How will the settlement be affected when and if it ever comes. The at-fault driver's insurace company is denying fault and already denied my property claim.

Attorney Answers 3


Your cause of action will be property of your bankruptcy estate. Should you fail to disclose it on your schedules, you will not be allowed to pursue it ever, and you can expect the defendant to raise that fact as an absolute defense. The trustee will have the right to take over prosecution of the claim, and he may choose not to hire the attorney you want. The trustee will also have the right to settle the claim, subject to court approval. The trustee will have to pay you however much you are able to exempt but will keep the rest. You will want to consult a GA bankruptcy attorney to learn about the exemptions that might be available to you. From one source I've read, it looks like that may be $10,000, but you should absolutely not take the word of an Internet lawyer who doesn't practice in GA!

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The Chapter 7 Trustee will keep your Chapter 7 "open" until the claim is resolved. The money that you might be receiving from the claim is treated as if it were cash or money in a savings account. This means that if what you will receive places you above the Georgia personal injury exemption of $10,000.00 plus any wild card exemption the state of Georgia may have, the Trustee would be able to take any such amount for creditors.

It is very important that you seek out an experienced local bankruptcy attorney to represent you in your upcoming bankruptcy.

Please be advised that the advice to you herein does NOT establish an attorney client relationship and that our firm does NOT represent you in any Bankruptcy matter.

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Let me stress that you need an attorney for both cases.

The auto accident must be disclosed in your bankruptcy as a possible claim you have. You will not be able to setle the case, nor can a lawyer even handle it, without approval from teh bankruptcy judge, which is obtained by a motion to employ counsel. If there is a recovery, either you or your creditors may end up with it depending on the details. In some cases the bankruptcy trustee may choose to take over the claim from your lawyer, although that is not common.

Since it is alleged that you are at fault, the accident also will have to be disclosed as a possible claim against you, and also in the statement of affairs as a loss.

You will want experienced bankruptcy counsel in this type matter If you have further questions feel free to contact me: 404-768-3509. In teh meantime, do not discuss the accident case directly with the insurer.

If you find this answer helpful, please mark it here on AVVO as helpful. In answering you, I am attempting to communicate general legal information and am not representing you. Do feel free to call me at 404-768-3509 if you wish to discuss actual representation (the phone call also does not retain counsel; that requires an office visit and appropriate paperwork). In that a forum such as this provides me with limited details and doesn't allow me to review details and documents, it is possible that answers here, while meant to be helpful, may in some cases not be complete or accurate, and I highly recommend that you retain legal counsel rather than rely on the answers here. (You can also email my office at . An email also does not retain my office, but can help you get an appointment set if you prefer not to call). Any information in this communication is for discussion purposes only, and is not offered as legal advice. There is no right to rely on the information contained in this communication and no attorney-client relationship is formed. Nothing in my answer should be considered as tax-advice. To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein. I am also required to advise you, if your question concerns bankruptcy, that the U.S. Congress has designated Ashman Law Office as a debt relief agency that can help people file bankruptcy.

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