It’s not unusual for a person to file for bankruptcy while in the midst of a personal injury lawsuit. Someone in this situation may wonder how the court will handle the money he or she receives from the case. Here’s how bankruptcy trustees deal with income from lawsuits and how a bankruptcy attorney in St. Charles, MO can help a petitioner keep as much of the cash as possible.
Lawsuits Are Considered Part of the Estate
When a person files for bankruptcy, the individual’s assets are consolidated into a bankruptcy estate. The trustee in the case will use or sell non-exempt assets to pay creditors. Proceeds from lawsuits are included in the estate. As such, any type of settlement or judgment the person receives during or after the bankruptcy case may be confiscated by the trustee to pay creditors.
A person is required to indicate on the bankruptcy petition whether he or she has any interest in cases that may result in a payment, even if the person hasn’t filed (or doesn’t plan to file) a lawsuit. Additionally, the trustee has the authority to pursue claims for damages in the petitioner’s steed. For instance, if the petitioner was involved in a car accident but chose not to sue, the trustee may sue on his or her behalf to get money from the liable party.
Protecting Proceeds from Confiscation
Missouri bankruptcy law provides protection for some or all of the proceeds from a lawsuit. A bankruptcy attorney in St. Charles, MO office can use exemptions to keep the trustee from taking some of the cash, for instance, Missouri has a $600 wildcard exemption that can be used for any asset. Married people filing jointly can double their exemptions to protect the lawsuit proceeds but only if both people are involved in the case.
If the lawsuit is for damages related to a wrongful death, Missouri lets the surviving family member keep as much of the money as deemed necessary to support the family.
Consult with a bankruptcy attorney in St. Charles, MO office for assistance with finding other ways to keep more of money from a personal injury lawsuit. For more information on filing bankruptcy, visit Vandillenfloodlaw.com.