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How can I exempt a civil rights/harassment/injury lawsuit from BK Ch7?

Costa Mesa, CA |

I received a discharge for CH 7 BK however it is not closed due to pending lawsuit against former employer worth almost 2.5 million USD. At the time I filed BK ch7, I had no job, no money. I now have a job and money so I could pay my creditors back. The trustee will settle my pending lawsuit for 1.25% of its estimated award. I am still injured and receiving treatment for the injury my former employer caused. Can I waive my ch7 discharge and will that let me continue to pursue my lawsuit against former employer and stop the trustee from settling my lawsuit?

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Attorney answers 3

Best Answer
Posted

Think of your Trustee as a pit bull with a firm grip on your ankle. Consider converting to Ch13 and proposing a 100% Plan ... you should then be able to proceed with your lawsuit.

Filemon Kevin Samson

Filemon Kevin Samson

Posted

I agree with my colleague Mr. Whitaker, that your options are limited in a Chapter 7, but that you should be able to proceed with your lawsuit if you are able to propose a 100% Plan in Chapter 13 that is feasible, especially now that your circumstances have changes such that you can pay your creditors.

Posted

Generally ownership rights and interests in property of the debtor become property of the Bankruptcy Estate upon the filing of the bankruptcy.
From the information you provided it is unclear what you mean when you say your pending lawsuit is "worth almost 2.5 million USD". Is that the amount demanded in the complaint, a settlement offer you've been given by the defendant, or a judgment awarded to you? Are you saying the Trustee wants to settle the lawsuit for $31,250, and you want to know if you can prevent the settlement and continue with litigation?
The Bankruptcy Trustee has a duty to the pay your creditors with the proceeds from any money recovered from non-exempt property. Verify with your attorney that you properly exempted any amounts received as a result of your pending litigation.

Note: The statements or comments provided herein are for general information purposes only and do not constitute legal advice as to any particular individual or instance. Samson & Associates does not represent you until a written fee agreement has been signed by you and a representative of Samson & Associates, and all fees listed in the agreement have been paid.

Asker

Posted

the value is the demand in the complaint which consists of unpaid work and overtime, personal property, retaliation and personal injury. correct the trustee is settling the case for $31,250 (my unpaid time alone is $125,000. Yes I want to prevent the settlement and pursue with litigation. The BK Attorney showed me where to list my pending case but I don't remember if it was also listed in "Exempt" I'll have to check again but the BK attorney didn't inform me that I could exempt the pending litigation. He said I only could exempt some personal property and a wildcard

Filemon Kevin Samson

Filemon Kevin Samson

Posted

If you truly believe your lawsuit is worth $2.5 million, then it would seem wise to consult with an experienced Bankruptcy Attorney in your area. At minimum, you might want to consider having an attorney calculate whether you would be able to sustain a feasible 100% Chapter 13 Plan given your new financial circumstances. My firm has an office near you. Feel free to call if you have any further questions. www.SamsonLawFirm.com

Posted

This was an issue that should have been discussed and considered in great detail with your lawyer prior to filing your Chapter 7 case. Once you made the decision to file, it was essentially a decision to voluntarily hand over your assets to the Trustee for the creditors. If you filed with out a lawyer, it was an expensive mistake. Now that creditors have a source of money, the Court will act in the best interests of the creditors, not you. You won't likely get out from under Bankruptcy jurisdiction without paying creditors just on a promise to pay and an asset you claim is worth $2.5 million. A 13 might be an option if you pay everyone in full. "Everyone" now includes the Trustee and all the fees and expenses incurred and often the commissions he would be due. You can object to any settlement of your claim, but you have the burden of showing it is worth more AND why it should not be settled to pay creditors. Many people overstate the value of their lawsuits, often many times over.

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