If I receive a large personal injury settlement and my attorney doesn't file a lien, can I go bankrupt and keep all the money.

Asked about 1 year ago - Los Angeles, CA

I have a settlement in principle in place for a large sum that is necessary for my future support. I owe my attorney for his services but have a dispute as to what I owe and he has no lien in his agreement with me. All the medical bills and conceivable attorneys fees I would owe would not exceed the amount I anticipate getting in the settlement. I have no job. If I file bk will it be considered in bad faith or an abuse?

Attorney answers (10)

  1. Paul J Molinaro

    Pro

    Contributor Level 17

    20

    Lawyers agree

    Answered . Should someone be unlucky enough to get into an accident but then lucky enough to hire the right attorney - an attorney who successfully gets that someone "a large personal injury settlement," then that certain someone should be thanking his or her attorney and telling everyone he or she knows how great that attorney is... and not asking other attorneys how to avoid paying the successful attorney.

    That said, when one has the cash from "a large personal injury settlement," it probably precludes that person from filing bankruptcy. Bankruptcy is a legal tool for people with no money, not people sitting on a "a large personal injury settlement."

    - Paul

    Paul J. Molinaro, M.D., J.D.
    Attorney at Law, Physician, Broker
    Fransen & Molinaro, LLP
    4160 Temescal Canyon Road, Suite 306
    Corona, CA 92833
    (951)520-9684
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    * This post and all others I make on Internet are for informational purposes only. None of the information or materials I post are legal advice. Nothing I post as comments, answers, or other communications should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship. While I try to be accurate, I do not guarantee accuracy.
    ** Fransen & Molinaro, LLP practices in the areas of personal injury, medical malpractice, and real estate law and does so anywhere in the State of California.

    Paul J. Molinaro, M.D., J.D. ... Attorney at Law, Physician, Broker... Fransen & Molinaro, LLP... 980 Montecito... more
  2. Michael Ryan Juarez

    Contributor Level 16

    16

    Lawyers agree

    Answered . It may be considered an abuse. I suggest you try arbitration to resolve your fee dispute.

    -Michael R. Juarez Law Office of Juarez and Schaeffer PO Box 16216 San Diego, CA 92105 (619) 804-4327 www.jslaw.... more
  3. Kevin Bernard Zazzera

    Pro

    Contributor Level 13

    15

    Lawyers agree

    Answered . The bankruptcy would not be considered bad faith or an abuse, but you will incur additional fees by having a bankruptcy Trustee pay your debts, and, if he keeps your current attorney, the Trustee would decide how much to pay him and how much your case should settle for. Talk to an experienced bankruptcy attorney before you try this. I don't see how it would help you.

  4. Christian K. Lassen II

    Pro

    Contributor Level 20

    12

    Lawyers agree

    Answered . No, but you will have more fees. Call a local BK lawyer to investigate.

  5. Michael Raymond Daymude

    Pro

    Contributor Level 20

    8

    Lawyers agree

    Answered . This sounds like a law school exam question to me. Whether or not your attorney has a lien (he probably does, despite your protestations to the contrary) seems immaterial. Your attorney is entitled to the contractual percentage or reasonable compensation either from your bankruptcy estate or from you personally. A bankruptcy proceeding may be able to reduce your attorney’s overall fee, although fee arbitration or a civil lawsuit would accomplish the same result.

    You do not specify the type of proceeding you are contemplating, although I assume it would be a Chapter 7. A "large sum" would not be exempt and any amount above the exempt amount would go to your creditors, including your attorney and medical providers. For more information about settlements in the bankruptcy context, see my blog post: Inheritance and Bankruptcy
    https://www.mrdaymude.com/inheritance-and-bankr...

    I am licensed in California only and my answers on Avvo assume California law. Answers provided by me are for... more
  6. Brad Francis Weil

    Contributor Level 11

    8

    Lawyers agree

    Answered . If you can fully exempt the settlement money than you can keep the exempt settlement money. If your attorney does not have a lien he is an unsecured creditor just like all of your other unsecured creditors. Hire a bankruptcy attorney to do exemption planning before you file.

  7. Edgar Julio Gutierrez

    Contributor Level 7

    6

    Lawyers agree

    Answered . I doubt highly that your attorney does not have a "lien." If you signed a retainer agreement, the fee payment will be spelled out in the agreement. Even if he didnt, he would have a right to recover for the reasonable value of services so you will owe him/her whether you want to or not.

    Having said this, I think you are treading on dangerous water here and could actually lose your whole settlement. While I don't practice BK law, and certainly encourage you to consult a BK lawyer, my experience has been that if you file a Chapt. 7 (complete liquidation) when you have assets (the settlement) you can be assured that the attorney or someone else on his behalf will file a motion to try to convert a Chapt 7 to a 13 and force you to pay, even at a reduced rate.

    Bottom line is if the attorney helped you get that settlement, he/she is entitled to be paid for their efforts. It is not fair that you would even consider stiffing the attorney because you want to keep all of the money. If the amount is not that much, you can try to work it out with him/her or, go to fee arbitration which is usually required before you pursue formal action. Stiffing the lawyer is not the way to go and I can assure you that your money will sit in his trust account longer than you can imagine if you take the approach you are contemplating.

    The responses provided at this site are not and are not intended to be, legal advice or a guarantee of the outcome... more
  8. Tatiana Kadetskaya

    Contributor Level 19

    5

    Lawyers agree

    Answered . Call a bankruptcy attorney to discuss this in detail

  9. Albert Lee Crosner

    Contributor Level 18

    3

    Lawyers agree

    Answered . Talk to a bankruptcy attorney.

    Mr. Crosner is licensed to practice law in California and has been practicing law in California since 1978. The... more
  10. Stephen Peter Anderson

    Pro

    Contributor Level 8

    3

    Lawyers agree

    Answered . Most personal injury retainers include language that they have a lien for fees against any recovery. In addition, your settlement check will contain your signature AND the attorney's, so that you sign first, the attorney signs second and puts the funds in his/her trust account. When cleared by the bank, the attorney will simply distribute the funds per the agreement, paying all statutory liens and costs and the agreed upon attorneys fees. You will get what's left. There is a fee arbitration procedure in the county level that will allow you to challenge the fees, but don';t expect to win simply by saying you want to keep more money. Finally, a bankruptcy can be filed, but your recovery simply then becomes an asset (less allowable exemption) of the bankruptcy for a trustee to distribute. It is doubtful that a trustee would ignore the attorneys right to the agreed upon fee, when the funds obtained were for your benefit, as well as the medical and insurance carrier benefit. Consult a bankruptcy attorney.

    The comments made here are meant to direct you to receive local consultation from an attorney in your area and ask... more

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