How Does Filing Bankruptcy Affect My Personal Injury Case?

July 25, 2022

If you have been injured in an accident and are considering filing for bankruptcy, you may wonder how this will affect your personal injury case. The answer depends on a few factors, including the type of bankruptcy you file and the stage of your personal injury case.

As you already know, bankruptcy is a legal process, which means there will be some outcomes and challenges to what you will be filing. You need to have some information about bankruptcy requirements so that you can be in a position where you are not making significant mistakes in your procedure. 

Chapter 7 Bankruptcy

If you file for Chapter 7 bankruptcy, all your assets will be sold to pay off your debts. However, certain property types, including your home, car, and personal injury settlements, are exempt from this process. This means that if you have already settled your personal injury case, the money you receive will not be affected by your bankruptcy.

Also, Chapter 7 bankruptcy will not discharge any debts you incurred because of someone else’s negligence, such as medical bills from your accident. This means that if you have not yet settled your personal injury case, you may still be able to receive compensation for your injuries, even if you have filed for bankruptcy.

Chapter 13 Bankruptcy

For Chapter 13 bankruptcy, you will not have to sell your assets to pay off your debts. Instead, you will create a repayment plan to repay your creditors over time. Your personal injury settlement may be included in this repayment plan, which means the amount of money you receive from your settlement could be reduced.

Over the years, Chapter 13 bankruptcy has become more debtor-friendly, which means that you may be able to keep more of your personal injury settlement if you file for this type of bankruptcy. However, it is still important to speak to an experienced attorney before filing, so they can assess your specific situation and advise you on the best course of action.

Insurance Company

If you have not yet settled your case, the insurance company may try to use your bankruptcy filing to reduce the amount of money they have to pay you. They may argue that because you are in financial distress, you are more likely to accept a lower settlement offer. If you are concerned about this, you should speak to an experienced personal injury attorney before filing for bankruptcy.

Your insurance company will also be notified of your bankruptcy filing, and they may use this as an opportunity to cancel or reduce your coverage. This could significantly impact your personal injury case, so it is crucial to speak to an attorney before taking action.


Bankruptcy can be a complex process, and it is essential to understand how it will affect your personal injury case before you file. An experienced personal injury attorney can answer any questions you have and help you protect your rights. If you have been injured in an accident, contact our office today to schedule a free consultation. Contact The Law Offices of Max G. Arnold, Inc. for assistance.

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