This is serious. Be sure to discuss it with your bankruptcy attorney. Yes, a trustee can dis-allow any applicable exemption due to your omitting this asset from your petition. Good luck.
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I guess you are asking if the trustee can do what he or she is doing & the answer of course will be decided by the judge.
The issue is why you did not list the personal injury case in your bankruptcy petition?
If it was an honest mistake, such as you had no intention of starting a law suit (assuming none had been started when you filed bankruptcy OR you thought the question in the Statement of Financial Affairs regarding law suits did not mean personal injury suits, whether because the case was not put into suit or you thought it meant collection law suits against you, you should be ok.
As has been pointed out, the big question is *why* you didn't list it.
Once the trustee relies upon the lack of exemption, it is generally too late to amend your exemptions.
Amend the petition and list the PI case. If there was bad faith the Trustee would still have an objection. If you do not have a lawyer, get one.
Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.