New Unpublished Opinion From the Virginia Supreme Court Helps Shed Light
on the Effect of Bankruptcy on Personal Injury Claims
If an individual is simultaneously involved in both a bankruptcy filing
and personal injury litigation, the results can potentially be disastrous
for their personal injury claim, depending on the situation. We previously
discussed the impact of bankruptcy filings on personal injury claims in an
October, 2013 blog, which can be found here.
With the assistance of appellate counsel, the attorneys at the Halperin
Law Center were recently successful in taking one particular case out
of the disaster category. This particular situation involved a debtor
(an individual already involved in bankruptcy) who had filed for chapter
13 bankruptcy protection and confirmed her chapter 13 bankruptcy plan
prior to her disabling injury. Based on her circumstances and the advice
of her bankruptcy attorney, the debtor then converted the chapter 13 bankruptcy
to a chapter 7 bankruptcy prior to filing a lawsuit in her personal injury
action. At the time of that conversion, the debtor knew that she had a
workers’ compensation claim, which she listed on her schedules.
She did not, however, understand or believe that she had a viable personal
injury claim at that particular time. As such, the debtor failed to update
her schedules to include the unliquidated personal injury claim. Even
though she was unsure that she had a viable claim, she should have listed
it as a potential claim. When in doubt, include it. The lesson to be learned?
ALWAYS UPDATE YOUR SCHEDULES. OFTEN.
In the instant case, Defense counsel was able to convince the trial court
that the unliquidated personal injury claim was property of the bankruptcy
estate at the time the debtor filed her personal injury action. The trial
court ruled that the debtor lacked legal standing to file her personal
injury action in her own name, and dismissed the case. The Halperin Law
Center appealed the trial judge’s erroneous decision on behalf of
the debtor and the Virginia Supreme Court overturned the trial court’s
ruling and remanded the case back to the trial court.
Click here for the full text of the Supreme Court’s opinion.
Had the Virginia Supreme Court chosen not to hear this particular case,
the injured client would have lost her ability to receive compensation
for her injuries, damages and pain and suffering. Given her astronomical
medical bills and the fact that her injuries have rendered her permanently
disabled, that would have been a disastrous result.
Whatever situation you may find yourself in, when bankruptcy and personal
injury cases overlap, as they often do, open communication between your
bankruptcy attorney and personal injury attorney may be the best to prevent
finding yourself in the “disaster” category.