Bankrupt and Injured? Don’t despair!

Imagine if you have been in financial trouble for a while, and then get in a car accident. Or imagine you’ve been hurt in an accident and its completely drained your finances — now you are swimming in medicals bills.

Is it possible to file both a personal injury lawsuit and a bankruptcy case? If you live in either Massachusetts or New Hampshire, the answer is yes, although the amount you can recover through a lawsuit insurance settlement is not unlimited.

The reason this works is that both Massachusetts and New Hampshire both allow their residents to claim the federal slate of exemptions when they file a bankruptcy case. And the federal exemptions allow you to claim up to $21,625 in money from an injury claim as yours to keep despite the bankruptcy.

Note that the actual amount you can protect might be somewhat larger, because the federal exemptions give you a generous “wild-card” exemption as well, and you may choose to apply some or all of that to the injury case as well. The amounts, however, will differ from case-to-case, so you should contact a bankruptcy attorney to discuss the specifics of your situation.

 

By Doug Beaton

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