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What happens to a legal settlement if I file bankruptcy during litigation and prior to being awarded (IF awarded) a settlement?

Richmond, VA |

I am currently in pretrial litigation with a jury trial expected in the next six months. (I have been in the litigation phase for the last three years.) My attys believe that any verdict received when we finally go to trial will then go to appeals, and the appeals process will take up to an additional year to determine, and nothing is garaunteed as a settlement for me. However, I am in dire financial straits NOW, and I believe that I need to file for bankruptcy prior to the trial and appeals process ending. What will happen to any settlement or jury award that I receive (IF I receive anything) if I file for bankruptcy prior to the jury trial and potential appeals process? I am looking at least another 18 months of waiting for a final answer on any type of settlement, IF I even get one.

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Attorney answers 3


If you file for bankruptcy, your pending claim becomes part of your bankruptcy estate and your bankruptcy trustee takes over control of it. You will have no control over whether the case should be settled or for how much, or even whether the case will continue. It is a very expensive alternative, but it may be a better alternative than bankruptcy, to seek a pre-settlement advance. You should certainly discuss these matters with the lawyer handling your case before you do anything.



Thank you for answering my question. If I file for bankruptcy now and then hypothetically speaking the case goes to court in six months and the jury finds and awards in my favor and then the defendants go to appeals and the court of appeals (two years later) still finds in my favor and the def has to pay me damages (nearly three years after filing for bankruptcy) does that amount of money still belong to my bankruptcy estate- even after three years?

Joseph Jonathan Brophy

Joseph Jonathan Brophy


Honestly I do not know. There is a section on Avvo for bankruptcy issues. You might post your question there. And I repeat, don’t do anything without consulting with the lawyer handling your case.



Absolutely, thank you.


When you file for bankruptcy protection your unsecured creditors are entail to the value of your non exempt assets like the potential judgement you described. In short you will lose the assets if it ends up being worth anything.


You didn't tell us what this trial is about. If it is for a personal injury--like an injury from a car accident or medical malpractice--you can file bankruptcy and under Virginia law the personal injury claim would still belong to you. If it is for economic damage--like employment discrimination or just the damage to the car or like flood damage to your house--the bankruptcy court could take over some of it, maybe all.

Of course filing bankruptcy could have some affect on the timing of all this

To get a good answer, a lawyer really needs to know what this litigation is about. You already have lawyers who know what the litigation is about, so you should start with them. They could suggest bankruptcy lawyer there in Richmond to talk to if you need more information.

If you have a legal matter going on, it's usually not a good idea to be doing things without telling your lawyer.

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