Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

Personal Injury Settlements Are Protected in New York Bankruptcy, to a Point

In bankruptcy in New York and elsewhere, not all assets are tangible property like items purchased with a credit card, or a house with a mortgage. Rather, income from third parties, such as a settlement from a personal injury settlement, also counts. Here are a few things you need to know about personal injury settlements in a New York bankruptcy:

  • Federal exemptions protect up to $20,200 in personal injury claims, but they exclude noneconomic damages, e.g. pain and suffering. However, economic damages such as medical expenses and lost wages are covered.
  • Also under the federal exemptions, up to $21,625 in a “wild card” exemption can be applied to a personal injury settlement.
  • New York has its own personal injury exemption up to $7,500, but this also excludes pain and suffering. The federal and state exemptions cannot both be used, so the settlement is better protected under the federal exemptions.
  • In theory personal injury settlements can be further protected in Chapter 7 proceedings if the creditors fail to file their “proof of claims” with the bankruptcy court before the deadline. If this happens, then they waive their rights to collect on non-exempt debts like the balance of a personal injury claim above the exempted amount.

There are two things to take from these points:

One, the amount that is exempt depends on whether the damages are characterized as economic or non-economic damages, which is a decision you and your personal injury lawyer will have to make when negotiating with the defendant. Thus, make sure your lawyer is a good negotiator who can foresee a bankruptcy filing in the future. This may be unlikely to occur, but anticipating future problems is a skill good lawyers have.

Two, an experienced New York bankruptcy attorney is vital to help you decide which set of exemptions is best for your case. In some situations the state exemptions may be best; others may be better off under the federal exemptions.

For more questions about personal injury settlements and bankruptcy, please feel free to contact experienced Brooklyn bankruptcy attorney near me Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/

Recent Posts

Beware Grace Periods, Debtors

Too often, debtors see grace periods offered by lenders as free benefits. “Grace” makes it sound so innocent. However, debtors who routinely rely on grace periods when making payments will find themselves facing financial difficulties that might lead to bankruptcy. The reason is that although creditors offer grace periods to debtors, they also use them

Read More »

Bankruptcy May Not Rescue You From Vicious Personal Disputes

Bankruptcy is a technical process that assumes everyone working within it is mostly rational. To the extent that it expects parties to deviate from irrational behavior, the Bankruptcy Code and its accompanying rules include incentives to keep parties in line. Creditors are usually large and impersonal, and they rarely care if their debtors file bankruptcy.

Read More »

Non-Lawyers’ Explanations of Bankruptcy May Be Wrong

Do you have financial problems? Do you tend to ask your friends for advice? Is one of your friends an experienced New York bankruptcy lawyer who will explain the process for you? Are your friends otherwise knowledgeable people? The answer to these questions may be, “Yes but you don’t know it.” Although many bankruptcy lawyers

Read More »

6 Steps to Take Before Filing Bankruptcy

Leaving your case to an experienced New York bankruptcy lawyer is not the only step on the to-do list before filing bankruptcy. There are many things debtors should do (and not do) before they file, and the more organized and mindful debtors are, the easier the process will be and the more effective the result.

Read More »

Social Security Number Not Necessary for Bankruptcy

A question that’s commonly asked about New York bankruptcy is whether a debtor needs a Social Security number to file. Debtors ask because they sometimes run across the bankruptcy form title, “Your Statement About Your Social Security Numbers” (B 121), which asks debtors to list their current and prior Social Security numbers. The new bankruptcy

Read More »

How Can a Debtor (or Creditor) Get a New Trustee?

The trustee in a New York bankruptcy case is usually not the debtor’s ally. His or her purpose is mainly to administer the bankruptcy estate or ensure the debtor’s repayment plan goes according to plan. Trustees pursue preference payments, fraudulent conveyances, and other malfeasance committed by debtors. They frequently initiate adversary proceedings against debtors. In

Read More »
Scroll to Top