Oklahoma Bankruptcy and Personal Injury Settlements often go hand in hand. One of the leading causes of bankruptcy in the United States is medical debt.  A sudden illness can dump thousands of dollars in medical bills on an unsuspecting family, ruining even carefully planned finances.  For others a  personal injury can lead to  hospital bills, insurance claims, and lawsuits.  Though you have insurance, it can take months to settle with an insurance company and longer depending on your case.  In the meantime, medical bills not covered by insurance pile up, not to mention problems caused by missed work.

Bankruptcy Exemptions And Personal Injury Claims:

The question asked by bankruptcy clients in an injury situation is “Will I lose my Personal Injury Settlement in bankruptcy?”  This is an important question, as this money could be thousands of dollars.  The answer is that Oklahoma bankruptcy law provides relief in the form of an exemption. Bankruptcy Exemptions are provisions in the bankruptcy laws which allow a debtor to keep certain kinds of property.  The Trustee cannot take exempt property to pay off creditors.  Commonly used exemptions include the homestead exemption, vehicle exemptions, and retirement savings exemptions.  For personal injury victims a debtor may exempt his interest in a claim for bodily injury up to $50000.  This protection includes both claims that have yet to be settled, adjudicated, or paid, and claims that have been paid out before the bankruptcy is filed.

For those claims that have been paid out before the bankruptcy filing, however, special precautions must be taken.  Only money identified as specifically from the settlement or judgment is an exemption.  The best way to identify the money is keep it separate from other assets by keeping it in its own separate bank account.  That way, when preparing the bankruptcy, the attorney can note that the account is exempted, and can account for all the funds in it.  But, the trustee can take money mixed with other non-exempt bank accounts or assets.

Personal Injury Money Not Covered by The Exemption:

It is also important to note what the exemption does not cover. It does not cover funds in excess of $50,000.  So, if a debtor has a claim for $75,000, $25,000 would be subject to trustee claims to pay creditors.  It also does not cover awards for exemplary or punitive damage.  Suppose, rather than settling, the previous debtor won a judgment of $75,000, with $25,000 for their injury, and $50,000 in punitive damages.  The debtor would only be able to exempt the $25,000.  While the personal injury exemption is not perfect, it does provide a measure of protection for those who find themselves in dire financial circumstances while waiting for a settlement or judgment.

Contact Us Regarding Oklahoma Bankruptcy and Personal Injury Settlements

Call today to learn in more information about Oklahoma bankruptcy. We will set up a free consultation and discuss bankruptcy options with you. Call 918-739-8984