A lawsuit can be a stressful process, whether you are the plaintiff or defendant. One of the many considerations of a lawsuit is whether the other party is even able to pay the damages you are requesting. This can bring up an important question about personal injury debt and its eligibility for discharge if the responsible parties file for bankruptcy.
This consideration is one that our Florida personal injury lawyer at Lytal, Reiter, Smith, Ivey & Fronrath often discusses with clients. Let’s examine whether personal injury judgments are dischargeable in Florida.
Who is responsible for paying after a personal injury judgment?
After the judge issues a judgment in a personal injury case, the timeframe for payment can vary. In many cases, the insurance company may be responsible for the payout. However, if the damages are more than the policy limits or if the responsible party doesn’t have insurance to cover the damage, they may be responsible for the amount.
Insurance companies are often the payors in personal injury claims, but those handling the compensation may also be small businesses, sole proprietors, or individuals.
What happens when the personal injury debtor can’t afford to pay the settlement?
When an individual or business becomes responsible for damages in a personal injury settlement, they may be considered an unsecured debt in a Chapter 7 or Chapter 13 bankruptcy. Sometimes in a Chapter 11 bankruptcy case, a company may manage to restructure debt in such a way that it avoids payment to the injury victim.
How does bankruptcy affect a Florida personal injury claim?
Personal injury cases and bankruptcy are incredibly sensitive to timing. If you are curious to know if you have a case, considering whether the responsible party can afford it or whether they are already involved in the bankruptcy process is a critical part of how you continue.
When a defendant begins the bankruptcy process, it triggers a freeze on all attempts to collect debts. This automatic stay also halts proceedings in a personal injury lawsuit. Like a discharge, you may be able to request relief from the stay to allow the process to continue.
When is a personal injury debt ineligible for discharge?
There are many situations in which a responsible party may avoid payment of a personal injury debt. However, according to the United States Courts, there are two circumstances in which this may not be the case:
- Personal injury damages that are a result of willful or malicious acts
- Personal injury damages related to injuries caused in a DUI accident
These circumstances allow the creditor to petition the courts to exempt these debts from discharge. Without an intentional request, they may be included with other discharged debts. Chapter 7 bankruptcy often provides more opportunity for creditors to challenge a discharge, while Chapter 11 and 17 bankruptcies may provide more opportunity for discharge. When the individual files for bankruptcy, notifying creditors is part of the initial process, which allows time for these appeals.
Where can you speak with a Florida personal injury lawyer to answer my personal injury settlement questions?
If you have been injured in an accident, you may be relying on money from the settlement to help you recover costs associated with the medical bills, time off work, and the general hassle and emotional distress. Realizing that this may be at risk because the debtor is trying to have the debt discharged can be alarming.
Whether you are beginning a lawsuit or trying to figure out what to do after a judgment, you can call Lytal, Reiter, Smith, Ivey & Fronrath for a free case consultation online or by phone at (561) 655-1990 to figure out how our Florida personal injury attorney can help.
