On occasion while we’re handling a personal injury case we will find that the defendant in that case has filed bankruptcy, what happens if you’re involved in a personal injury case and the defendant files bankruptcy? There’s several possibilities. One, let’s take a look at the situation where the defendant has an insurance policy. If that insurance policy is sufficient to cover the damages that you’ve sustained in your accident then you can pursue your claim against the insurance policy regardless of the filing by the by the defendant.
You have to go through a process and a procedure with the court to get approval to do so but once you do that you can proceed in your case as if the defendant had not filed bankruptcy at all, that’s one situation. Another situation might be where the defendant has no insurance and you’re pursuing that defendant out of his or her own assets the bankruptcy filing can be a significant barrier to your recovery.
In that situation the only way you could potentially recover from the defendant is if that person still has assets that are made available through the bankruptcy estate. You would probably have to hire a bankruptcy attorney and be able to pursue your claim either through bankruptcy court or with leave or permission of the Bankruptcy Court to complete the action in state court.
A third situation might be where the defendant has insurance but it’s not enough to cover all your damages. So, you have kind of a combination of the first two. You have some insurance but your damages or your injuries will exceed the available insurance and you may want to pursue that defendant for an additional sum beyond your insurance policy. The only way that that will actually happen is if the defendant actually has sufficient assets to cover that person’s debts and obligations otherwise most likely you’re going to be limited to the amount of insurance available from that person who caused the injury.
So, bankruptcy filing by a defendant can be significant or can significantly affect the outcome of your case depending on insurance, assets and what is potentially your injury.