Is My Personal Injury Claim Safe From Bankruptcy?

  • By:David Bate

Under Chapter 7 and Chapter 13 bankruptcy, personal injury claims are mostly exempt. However, some claims are rejected because of the failure of the debtor to disclose their personal injury claim. While enduring an accident can be stressful enough, losing your compensation can be devastating.  There are ways to keep your personal injury award safe from a bankruptcy estate. Do not hesitate to contact an experienced personal injury lawyer Miami, FL  trusts to ensure you are taking proper steps.

What Is A Personal Injury Claim?

Someone files a personal injury claim when they are physically harmed due to the negligence of another party. They file a claim to the insurance company to receive compensation for those injuries. Commonly claims are filed because of a car accident, a slip and fall accident, or medical malpractice.

Disclose All Your Assets

A personal injury claim is an asset much like your car, house, furniture and other items of your personal property and you must disclose them when filing for bankruptcy. If you do not disclose a personal injury claim before you file, then you may lose the chance to recover it, even if it was an unintentional mistake. Now your personal injury award is subject to being split up between creditors. You can also be held criminally liable for intentionally avoiding disclosure.

Unfortunately, many personal injury claims that are lost could have been exempt from bankruptcy had the debtors listed their debt. An attempt to shield the claim by avoiding disclosure usually ends in a loss because the courts are serious about undisclosed assets, even if the claim could be considered exempt if it was originally reported.

Injuries Sustained After Filing

If your injury occurs after you file for Chapter 7 bankruptcy, then you can keep your personal injury award because it doesn’t count as part of your bankruptcy estate.

An award received after filing for Chapter 13 bankruptcy is typically treated as income or windfalls. If the award is a higher amount than your exemption amount, then you may have to increase debt payments to your creditors. However, you may dismiss a Chapter 13 if you are not pleased with a result. You don’t have that ability with a Chapter 7 filing.

Is Your Personal Injury Claim Exempt?

Exemptions exist that protect all or a portion of your damages award. The bankruptcy code states that up to $23,675 from a personal injury award can be kept, not including pain and suffering or compensation for monetary losses.


If you are concerned about the status of your personal injury award, consider hiring a bankruptcy lawyer to discuss your options. Figuring out the particulars of the tax code can be daunting by yourself. Hiring a bankruptcy attorney knowledgeable in this complicated area of law may be the difference between keeping your settlement and having to distribute it among creditors.

Thank you to the Needle & Ellenberg, P.A for providing their insight and knowledge on personal injury.



Posted in: Uncategorized