Timing Bankruptcy When Being Sued

[JCSanDiego]

I'm just about to file chapter 7 and then was served a summons for a lawsuit resulting from an auto accident a year ago. I was wondering if I can still file C7, or if I need to wait til I go to court for the personal injury suit before filing so I'm protected from this? My first thought was I would wait until my lawsuit received a judgement - and then file, but then I wondered if perhaps I can still file now, especially since I've been served?

The accident is a joke. No injuries, but the plaintiff is asking for 9M! Insurance paid for the car damage. The plaintiff is asking for $5M for pain and suffering, $1M for lost wages, $1M for healthcare-related costs, and $2M for "future loss of wages". This person was not injured, never lost work - continued to work, has excellent medical benefits with small co-pays, and - a whole slew of preexisting medical conditions. It's insane.

My insurance will cover up to $250K for a personal injury suit. I'm seriously hoping this attorney is just going for the max and knowing they'll settle for what is within my insurance. I'm really stressed out. Any advice or comments are very welcome!

Thanks in advance!

[despritfreya]

Filing the bk and then notifying the Plaintiff of the bk will stop the lawsuit against you. Unless there was some bad act on your part, like drunk driving, your concerns should be over. The "injured" party can and will continue to pursue the insurance carrier after getting the automatic stay lifted.

If there is some other reason to wait, then wait. The lawsuit is not likely such a reason.

Des.

[JCSanDiego]

Thank you Des

Nothing bad on my part. It was a simple dumb decision to turn left and a car pulled out and hit me.

I'm just hoping my previous auto insurer will cover me, after leaving them for a new insurer.

[bcohen]

You can declare bankruptcy at any time, however if this is your only debt, I'd wait and see what happens. Unless you expect your income to increase to the point that you'll no longer qualify for Chapter 7, I fail to see how you lose anything by waiting. Sure, the plaintiff's attorney can demand any amount of money he sees fit, but ultimately, the damages sought must be proven and it sounds like this lawsuit will be settled for a fraction of the "damages" being claimed. In the unlikely event that the plaintiff wins a judgment for more than your auto insurer will pay, you can always declare bankruptcy at that point, which will extinguish your liability to pay.

[JCSanDiego]

Thank you!

I've been waiting to file chapter 7 for cc debt, for over a year... was just about to pull the trigger and call an attorney, and then this PI suit was dropped on me. Income is the same and I'll qualify for the chapter 7. Was just curious as to how this works as far as timing. I know with the cc debt, it's money I've borrowed, spent, and owe. The PI suit though, is just a claim at this point since nothing has been determined or awarded. That was my concern, filing chapter 7 before an award was decided (IF the plaintiff receives one), and possibly get that pinned on me post-bankruptcy. Thank you both for taking the time to help clear that up!

I still can't wrap my head around the figures this plaintiff and their attorney came up with. And furthermore, how can someone actually (legally) make these claims, sign docs, and submit to the superior courts - when it's nonsense? Can anyone ask for anything? Yet - actually claim they miss work, have medical expenses they don't, and "pain and suffering" resulting from PTSD over this accident? Where's the accountability? I don't wish anything bad on anyone - even someone making false claims... but wow. Just seems unfair to not only me but the courts and taxpayers that anyone can make egregious, false claims with the intention of making money and there's no consequences. Anyway... no one was hurt - thank God, and now I just want this thing to go away so I can stop stressing out.

[justbroke]

Welcome to jurisprudence and personal injury litigation in the United States. In the personal injury space, its about extracting money from the insurance companies -- as most people don't have any major assets. The games played are embarrassing.

A friend of mine was hit from behind while at a standstill (30MPH). Both my friend and the defendant had the same insurance company. The insurance company did everything in their power not to pay a dime outside repairing the two vehicles. They had to hire an attorney because the insurance company wouldn't pay the medical bills. It took a year to recover $1,800 that went to her (plus attorney fees, hospital and therapies). They are still in pain, still goes to chiropractor monthly (at their own cost). The insurer still insist that they paid too much.

Again, welcome to the American system.

[despritfreya]

I've been waiting to file chapter 7 for cc debt, for over a year... was just about to pull the trigger and call an attorney, and then this PI suit was dropped on me. . . The PI suit though, is just a claim at this point since nothing has been determined or awarded. That was my concern, filing chapter 7 before an award was decided. . . I still can't wrap my head around the figures this plaintiff and their attorney came up with. . .

Two comments:

1) Definition of "claim" under 11 USC 101(5):

(5) The term “claim” means— (A)right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured;. . .

A PI claim, whether valid or not, is still a claim for bankruptcy purposes and is subject to a discharge unless it rises to the level of some action under 11 USC 523(a) that makes it non-dischargeable.

2) I would not try to wrap your head around the amount of the alleged "claim". People sue each other all the time and for the pettiest of reasons. Let your insurance carrier deal with the validity of the "damages". You are filing bk. Once you file, unless there is something else to this, you will be done with it.

Des.

[JCSanDiego]

Thank you. I feel a lot more at ease now.