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Under a 13 plan can any money received from a bad faith lawsuit be exempted?

Charleston, WV |

After filing a chapter 13, a bad faith claim due to an automobile accident is paying out.The plan has not been confirmed.It has been a year and a half.I think the attorney was holding out for this money.He plans to change us to a 7 after getting the money.should he had filed a hardship when I lost my job and our bk discharged?should that money be ours and not the courts?

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Attorney answers 2


Hardship duscharge is a fact based analysis and cannot be answered here. If the asset from the lawsuit was available to the creditors that had to be disclosed and may have reduced the likelihood of getting a hardship discharge. Much of it depends on the Judge. You may have been able to convert to a chapter 7 but you might have lost all of the proceeds from the lawsuit, it depends on the exemptions in your state.

Talk to your attorney about the exemptions in your state and how much of the money you get to keep if any.


Were you the recipient of this claim? Did the incident happen prior to filing the petition? If so, then it had to be disclosed and is properly an asset of the bankruptcy estate. Failure to disclose it means that you lose it.

Regarding a hardship discharge, your entire case needs to be reviewed to determine whether it would even have been possible. The same is true when discussing conversion. Talk to your attorney and get your questions answered there.

[This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]

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