I can see your question is more from idle curiosity than practical purpose, but I will humor you with a brief legal justification.
Most (not all) judgments for personal injury can be discharged in bankruptcy.
The trial court system is supposed to ensure fair and balanced judgments on a variety of disputes. The bankruptcy system is to ensure that the unfortunate debtor is not saddled with an impossible debt for the rest of their life.
Every chapter of bankruptcy has ELIGIBILITY REQUIREMENTS, so people can't just "file bankruptcy and walk away." Of course, the poorer one is, the easier it is. The mid-level income (i.e., hard working people) have it the worst. They generally can NOT just "file bankruptcy and walk away", yet they don't really have the assets to pay out large judgments either. From a practical point of view, the ulta-rich also get a pass (like Mr. Trump) because they can hide a lot of money easily too.
In any case, I hope this slakes your curiosity.
If you need further clarity, please email me at MICHAEL@MIRELAND.US Answers to questions are for general information purposes only and do not establish an attorney-client relationship. This is not legal advice, simply information. You SHOULD NOT act on this information without consulting a competent bankruptcy attorney in your area and providing ALL relevant information.
Exceptions to discharge:
There are many purposes to the trial court system and many people are able to collect on Debts/Judgments using our trial courts, otherwise there would be no work for Attorneys successfully practising collections. Bankruptcy provides a fresh start to an honest debtor rather than jail time, previously known as "Debtor's prison." The previous answer is spot on.
Yes. But under certain circumstances, the proceeds of any insurance policy can still be recovered even after filing bankruptcy .
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