If you’re considering filing for Chapter 7 bankruptcy in Illinois, it’s important to remember that proceeds from a lawsuit may not necessarily be exempt. These proceeds include: money you’ve received from a lawsuit prior to filing for bankruptcy; money you have not yet received from said lawsuit; and money you may be entitled to receive for said lawsuit.
Any claims you have in a lawsuit or settlement must be reported when filing for Chapter 7, and these include personal injury claims, such as for auto accidents, workplace accidents, slip-and-falls, or medical malpractice. If an injury occurs or a claim arises when you file, you are required to disclose it; in some cases involving unreported personal injury claims, trustees have claimed the client’s compensation several years after they received their discharges from bankruptcy.
Here are some ways in which some of your personal injury compensation can potentially be saved in Chapter 7:
– Any award or settlement for an injury you sustained after filing for Chapter 7 belongs to you and is not part of your bankruptcy.
– You can keep a portion of your award or settlement, not including compensation for pain and suffering or monetary losses, using the “personal injury exemption” in the bankruptcy code.
– If your award/settlement exceeds the limit of the personal injury exemption, you may be able to protect more of it using the federal “wildcard exemption.”
– Attorneys’ fees for your personal injury claim do not count as part of your award/settlement when you file for bankruptcy.
If you are struggling financially and considering filing for Chapter 7 bankruptcy, you’re not alone. Contact an experienced bankruptcy attorney today for a free consultation.