Bankruptcy can have a negative impact on your Virginia personal injury cases. The full affect depends on whether the bankruptcy is filed by the plaintiff (the injured party) or the defendant (the party alleged to have caused the collision).
If you file bankruptcy while your personal injury case is pending you risk losing the ability to claim your medical bills as part of your damages if, or when, the case is tried. Sometimes you can lose the right to claim the bills in the personal injury suit, even if you did not list the bills as debts in the bankruptcy. In some bankruptcy proceedings all of your debts are dismissed even if you did not list the specific debt.
Virginia Circuit Courts have varied on whether you can claim the bankrupted bills in your personal injury suit. Some have ruled that you cannot claim them as damages in the car accident injury case because you never had to pay them. Other courts have ruled that you can still claim the bills. Even if you cannot actually claim the bills, you should be able to let the jury know the amount of the bills so that they can have some understanding of the extent of your injuries.
If the defendant files bankruptcy, it can affect your case in various ways. It will depend on when the defendant files bankruptcy and whether it is filed before or after the conclusion of the Virginia personal injury car accident case.
If the defendant files before the conclusion of the case then the case is essentially put on hold. The plaintiff is listed as a creditor and as such is included in the defendant’s bankruptcy. As a creditor you must stop trying to collect the debt until the bankruptcy case is worked out; which could possibly take years.
There is a process to get relief from the Bankruptcy Court to proceed with the personal injury case. Essentially the plaintiff has to agree to only seek to recover insurance proceeds that are available to the defendant. Now the case only has value of up to the insurance coverage. (this is normally the case anyway-explained in the next section). The new problem created is that the insurance company no longer has to worry about protecting its insured. The insurance company less pressure to settle the case for the policy limits because it’s insured does not have any personal exposure.
There is normally pressure on the insurance carrier to protect the insured from being personally responsible for any verdict over the insurance coverage. When the Bankruptcy Court lifts the stay to only go after the insurance proceeds then they no longer have pressure to settle within their limits because the injured party cannot collect from the defendant himself. Now the carrier is likely going to want to settle for some discount off its limits because their policy limits would be the most they would have to pay by going to trial.
If the defendant files for bankruptcy after a verdict in Virginia then you may lose the possibility of collecting any of the verdict. If there was insurance, the insurance company will pay the amount of the verdict up to its limits and then the defendant is personally responsible for the rest. If the defendant files for bankruptcy after a large verdict, which is a real possibility, then the debt may be discharged. There are some exceptions, such as if the verdict involved a drunk driving case.
Understand that the above is meant to be an overview. The Warren Firm represents only individuals in and families in person injury cases. The Firm does not handle any bankruptcy cases. You should discuss the affects of bankruptcy with both your personal injury attorney and your bankruptcy lawyer.
