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Is personal injury lawsuit awards exempt in chapter 7 bankruptcy

Sylvania, OH |

Im in the middle of a personal injury lawsuit and it most likely wont be resolved until late 2014 Im currently needing to file bankruptcy. I will approximately will be getting $25,000 of which 1/3 will be going to my PI Attorney. Will the amount i do end up getting be exempt if not how much will.

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Attorney answers 6


It really depends on which state exemption system is applicable to your bankruptcy case. The exemptions you use will first depend on whether you have lived in your current state for the 2 years before filing bankruptcy, and, if not, then it will depend on where you lived for the majority of the 6 months before the 2 year period arose. Most states and the federal exemption system have a personal injury exemption, but you really need to sit down with a bankruptcy attorney who can tell you with certainty how much you will be able to protect.

The information provided herein is general information only and not legal advice. The information provided herein does not create an attorney client relationship and is not a substitute for having a consultation with an attorney. It is important to have a consultation with an attorney as the information provided in this forum is limited and cannot possibly cover all potential issues in a given situation.

Michael Christopher Burr

Michael Christopher Burr


Ms. Larkin is right as usual. The reason to sit down with someone is not only the dollar figure, $23,000 I think for Ohio, but also to understand the process. A bankruptcy trustee gets to take over a lawsuit and proceed as the attorney with the discretion to settle the suit or take it to trial. If you are well under the exemption limit, they probably leave your lawsuit alone, but if it's close, the judges give the trustees latitude.


Federal case? State case? Claim only? Or going to trial? More details please


The laws the describe what property you may keep after filing a Chapter 7 bankruptcy vary widely between the 50 states even though bankruptcy is a federal law. I am posting a link to general description of these laws for all 50 states for you to review for yourself. Unless you find a law that fits the category of your personal injury claim, the bankruptcy trustee may be able to take all of the money. Even your fee agreement with your attorney may not be valid. Hope this perspective helps!


It depends. You need to sit down with experienced bankruptcy counsel to determine which exemptions are available to you, which apply and the amounts available.


First, what matters is all your assets not just the PI award. Each state has its own exemptions or additional exemptions. In Nevada the federal exemptions are not available as that state opted out.

Second, which state exemptions you use depends on if you have domiciled in Nevada more than 730 days. If so, Nevada law governs. If not, then other rules apply. Thus your state exemptions will govern if you have been domiciled there the last 2 years. Sit down with a bankruptcy attorney on that. Several different portions of the statute may apply , including the Personal injury compensation to $16,500 and a wild card section and possibly lost earnings.
Nev. Rev. Stat. Ann. § 21.090 (1)(u) governs the pi exemption in one area.

Not only do you care about your exemptions, there are other issues you really need to meet with an attorney on that you may not be aware. For example, if you paid back a relative $3000 back 11 months ago and file bankruptcy now, the trustee will sue that relative for the money you paid under a preference theory. That is but one example. See spend your money by seeing and employing an attorney who is experienced and has practiced for years and knows what to advise you on on your entire case including your question above!


The quick answer is that in Ohio the exemption on personal injuries is $23,000 (as of April 1, 2013.) But there are criteria you have to discuss with your attorney to be sure that your settlement is for actual bodily injuries as opposed to lost wages etc. Also, there are a few limitations (In Ohio, if you are incarcerated, for example, the exemption would not apply.) Assuming all facts are in your favor, I would expect you would be able to keep your portion of the settlement as you describe in your question. HOWEVER, please sit down with a bankruptcy lawyer ASAP because the timing of filing a bankruptcy can be important and the details as to their exempt status need an experienced lawyer's evaluation.

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