Pending lawsuit for car accident

[dman]

Wife was in a car accident a couple years ago. Lawsuit filed, hasn't gone anywhere. The settlement amount, after the lawyer's fees are taken out, isn't even enough to cover medical.

I know that if it isn't settled by the time we file, the trustee can take it over. I think he/she could decide to take the settlement and it'd all go to the creditors.

Now, my main question is...if this happens, would our current lawyer (the accident one) still get his cut? Or does the trustee have the ability to fire the lawyer and settle directly with the insurance company?

The reason I'm asking, is our lawyer has really dragged his feet on this. I've been asking for months about how the settlement would be divided up (i.e. if the medical amount was for less than the actual amount owed, our own car insurance company would pay up to $5,000 of the difference, so we might actually get something after all). Absolutely positively nothing from the lawyer. If I told him about how we're on the verge of filing bankruptcy, and he knows that the trustee could fire him and he wouldn't get a single penny...maybe that'd kick him into gear? Maybe he'd finally answer a simple question? We might get this settled and could use the non-medical portion to go towards some equity in a homestead that would be exempt. I dunno.

[starr4law]

Well, it would depend if you are taking Federal or State exemptions in your bankruptcy to begin with. Federal exemptions have personal injury exemption, lost earnings exemptions, etc. Usually, the attorney fee is not counted in the award when exempting. Plus, you can use your wildcard (if Federal exemptions are taken) to protect some of the settlement if you need to.

Do not use the $$ to pay into equity in the home because you think it will be exempt. There is a stop-gap measure to disallow this from happening. It is in place so that people cannot "hide" assets behind an otherwise exempt piece of property. Now, the trustee probably isn't going to check it out if you spent $2000 on a piece of jewelry and then that is exempt, but they do check homestead exemption for that very thing.

Good luck.

[dman]

State exemption - Tennessee

We plan on giving up our house. Thought it would be ok to put money toward a new residence, up to the exempt amount (in TN that would be $25,000, since we do have minor children).

Wildcard exemptions are already being taken for other things.

Tennessee's exemption for the lawsuit seems to be this:

"A payment, not to exceed seven thousand five hundred dollars ($7,500) on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent"

Now, I'm no lawyer here. I don't know if the "not including..." part means that the following would NOT be exempt...or if it means it would not count toward the $7,500 limit and would ALL be exempt.

Still interested in whether the trustee could fire the lawyer. If he/she could, then that might motivate our lawyer to actually do something, before he loses his 30% fee for not really doing anything.

[starr4law]

I've not seen a trustee fire a PI attorney and take over the case - although I suppose in reality they could . . . They can take over other kinds of cases (FDCPA, etc.), but usually abandon the claim to the extent it is exempt. I wouldn't hesitate to contact your PI attorney and let them know that you are contemplating a Ch 7. It might a) kick their butt into gear and b) they probably have a number of PI clients that end up filing and actually may have quite a bit of knowlege as to what the exemption limits are as they pertain to a PI case.

I am not familiar with TN exemptions - sorry However, be very careful that you do not violate the 1015 rule (or whatever it might be for you in TN). Again, it has to do with home equity and home purchases on the "eve" of filing. I would consult with a reputable bky attorney in your state who has experience in bky litigation (NOT a bky mill).

Good luck.

[dman]

Thanks. At least I know he won't have anything to worry about, so I'll have to try a different tactic to get him to hurry up.

Question, if the medical debt is discharged, and then we settle this lawsuit, I assume that we don't just get to keep that, right?

I tried looking up the 1015 rule, just talked about consolidation of cases in the same court. I'm probably looking in the wrong place.

Once again, I'm left feeling that we need to go ahead and do some phone consultations, though I'd much rather do this in person (we won't be back home until September, that might be too long to wait for a consult).

[dman]

Just an update, I received TWO emails from the lawyer today. Apparently they don't break down the settlement (i.e. they just give you an amount, they don't say how much goes to lost wages, pain and suffering, medical, etc.). Could have told us months ago. He also told us that though he doesn't practice bankruptcy, he knew that he'd still get his fee, creditors get remainder, and we would get no more than $7,500.

I can't say how accurate this info is, just passing along what we were FINALLY told.