Unfortunately, there is a relationship between the field of personal injury law and the field of bankruptcy law. At my law firm, Hajek, Shapiro, Cooper, Lewis, and Appleton, “all we do is personal injury law”; however, I have had to learn over 18 years in injury practice about the relationship of bankruptcy to what I do representing injured people. One of the main reasons that people end up in bankruptcy when they have been involved in a car wreck or some other injury is that huge medical bills began to mount and at the same time they have lost income from their work. This combination of medical debt and lost wages is often too much for the family’s budget to be able to handle when a personal injury occurs. If the person who gets hurt in a car wreck has a good job, like a unionized railroad worker, they stand a better chance of avoiding having to consider bankruptcy. If you have health insurance, the medical bills to treat your injuries get paid for mostly. If you have a good disability insurance policy which provides income when you are forced to miss work because of an injury, that is a huge benefit. However, many Americans and Virginians do not have disability and health insurance. A serious injury and prolonged disability from work can force a family to at least consider bankruptcy as an option.
The main thing that I as your personal injury lawyer need to know is if you go into bankruptcy. I will then get the name of a bankruptcy lawyer and be in touch with them to make sure to coordinate those areas where the law overlaps between personal injury and bankruptcy. One key issue is to make sure that you have disclosed to your bankruptcy lawyer that you have a personal injury case. The bankruptcy forms require you to list the personal injury claim and typically to get part or all of the settlement proceeds excluded from the bankruptcy estate. This is a somewhat tricky area because each state has potentially different laws on exclusion of personal injury claims from bankruptcy. In Virginia (VA), luckily, the law that applies excludes the claim entirely. What this means is that you would be able to keep all of the proceeds of your personal injury case even if you go into bankruptcy. However, in each person’s case where this comes up, I consult with the bankruptcy lawyer to make sure that we get good advice about the particular state’s exclusion of personal injury claims in bankruptcy.
The other aspect to bankruptcy that matters in how I handle personal injury cases, like automobile accidents, relates to the medical bills themselves. Whether the medical bills have to be paid back out of proceeds of the personal injury case is obviously affected by bankruptcy to the extent that the medical bills are wiped out by the bankruptcy. Typically, at the end of the case during settlement negotiations, our law firm checks to see what medical balances are still owed, if any. That way we can tell the client what a given settlement offer on their injury cases means in their pocket, with all of the medical bills and other debts paid. Also, there is an issue in how the case is presented at trial in terms of medical bills which may have been affected by bankruptcy. Typically, in a Virginia (VA) court, you can still put into evidence in court the amount of the medical bills as an indication of the pain and suffering caused to the client by the car wreck or other injury. However, this is something that the Virginia (VA) injury trial lawyer has to prepare for properly to make sure that the court is aware of the applicable law.
I certainly hope that no one in your family is involved in a car wreck or other serious personal injury. I also hope that you never end up having to go into bankruptcy. The main message is that clients understand that they should communicate fully and completely with their personal injury lawyer. Only if you tell your personal injury lawyer everything important about your financial situation including the potentially distressing and embarrassing facts about bankruptcy, if any, will you be sure that your attorney can properly represent you and get you the best possible result in an accident case.