Boston Car Accident Lawyer Blog
It is possible to pursue a Chapter 7 bankruptcy proceeding and a personal injury lawsuit simultaneously. But it has to be approached with caution. After all, we don’t choose to be a victim of negligence, and sometimes, it doesn’t happen at the most opportune financial point in our lives. It is to your advantage in this situation to hire an injury lawyer with full understanding of the complexity of both bankruptcy and injury law, and the ways in which these proceedings – one in state court and one in the federal system – can impact one another. 
In a recent case before the Virginia Supreme Court, a plaintiff was ultimately denied the opportunity to pursue her injury lawsuit because she improperly failed to exempt her negligence claim in her bankruptcy filing.
According to court records, plaintiff was involved in a motor vehicle accident in February 2012. Soon thereafter, she saw her primary care physician and complained of back and neck pain radiating into her head, causing her to suffer a severe headache. An MRI indicated she was suffering from disc protrusion. Doctors treated her with steroid injections, and she was also assigned to physical therapy and sessions with a chiropractor. These treatments weren’t effective, however, and she ultimately underwent surgery.
Shortly before the statute of limitations expired on her injury claim, plaintiff filed a complaint in the circuit court, alleging the other driver’s negligence was the direct and proximate cause of the crash that caused her injuries.
Defendant, though, moved for summary judgment, arguing plaintiff lacked the standing to pursue her claim because months after the crash, she had filed for Chapter 7 bankruptcy protection in federal court. The bankruptcy was ultimately completed. Defendant argued the only viable plaintiff in this case, therefore, would have been the bankruptcy trustee because plaintiff had failed in her bankruptcy filing to exempt the negligence lawsuit.
Bankruptcy filers can exempt (protect) their personal injury winnings or claim to such damages in a pending or forthcoming case – up to $23,675 – in some states. There is no protection for money gained for pain and suffering or property damage.
In the Virginia case, plaintiff was required to list in her bankruptcy petition her interests in personal property – including liquidated debts owed to her. On the question of other contingent and unliquidated claims of every nature, plaintiff marked “none.” In another section, where she was required to list the assets she claimed as exempt from the bankruptcy estate, she listed, “none.”
Based on this, circuit court granted car accident defendant’s motion for summary judgment. The conclusion was plaintiff failed to disclose her claim against defendant with requisite reasonable particularity under the circumstances, and that the claim therefore remained p[art of the bankruptcy estate – assertable only by the trustee.
By the time the circuit court ruled on the matter, the statute of limitations had expired for an injury claim, and the statute wasn’t tolled, so there was no way it could even by refiled by the trustee at that point.
Plaintiff, looking to avoid the statute of limitations bar, asked the court to amend the named plaintiff in her proceeding to the bankruptcy trustee due to “misnomer.” The court denied this motion.
Although courts have held in the past that bankruptcy exemptions shouldn’t be denied because they aren’t “perfectly precise,” but it does require that claimants file honest reporting. Here, the court held, plaintiff affirmatively represented to the bankruptcy court that no such injury claim existed. While there aren’t any bright line rules debtors have to follow to exempt a cause of action, schedules do need to contain enough detail to lead the trustee to the claim ultimately asserted, and plaintiff’s did not. Therefore, summary judgment favoring car accident lawsuit defendant was affirmed.
If you are injured in an accident in Massachusetts, call Jeffrey Glassman Injury Lawyers for a free and confidential appointment — (617) 777-7777.
Additional Resources:
Ricketts v. Strange, Feb. 16, 2017, Virginia Supreme Court
More Blog Entries:
School in Falmouth Holds Memorial for Student Athletes Killed in Crash, Feb. 12, 2017, Boston Car Accident Lawyer Blog