Trustee reopening after 7 years due to class action settlement

[justbroke]

What if the debtor developed cancer or had massive injuries and couldn't work at all and needed to pay for long term, ongoing care?

The wording of ANY settlement dictates how the money is treated. If the money is for care and to repay medical providers, that is (as far as I know) always protected (exempt). Even loss of income and future income may be protected (as the person can't work any longer). The fuzzy area is around punitive damages, since they don't directly seek to make the victim "whole" again, but to only punish the medical provider.

If the court appropriates the funds, then the recipient would have to refile BK13 (or 7) just to get out from under huge medical bills that the settlement was designed to cover in the first place. Hardly fair!

The court does not appropriate any funds. Most personal injury proceeds are protected since they are generally "targeted" towards medical care. Pain and suffering could also be protected. From what I have read, the wording of the settlement is what usually matters. It matters how the money is allocated to medical, pain and suffering, loss of income, or punitive damages.

And I know the argument is simply that the law is the law and can not be changed, but that doesn't make it right!

If this lawsuit had been known at the time of the bankruptcy filing, the debtor would be in no different position. As I wrote, usually a personal injury settlement is protected by State law and is exempt. However, if a PI settlement isn't written to apportion the proceeds to the categories (medical, pain, loss of income, punitive/other damages), then it could create some issues.

This is why I will always hate being bankrupt - like in a gambling house, the deck is always stacked against you , and the only way out to stay debt free to the best of your ability. And should you end up with $$$$$$ bills for life saving medical treatment, try to raise money through a GoFundMe campaign or the like before turning to the (not so) easy way out -any bankruptcy chapter!

Bankruptcy is actually the only thing that protects people form their creditors. Having a creditor sue you for $1,000,000 dollars and takes everything you have is potential outcome in some cases.

Think of it this way. Bankruptcy says... we'll protect you from your creditors and your $300,000 of debt if you either a.) liquidate all of your non-exempt property to attempt to satisfy the creditors, or b.) you try to pay back the creditors the best you can over the next 3-5 years. If you do one of a.) or b.), then the court will protect you and get rid of the remaining debt.

That a claim arose, without your knowledge, prior to the discharge of the case is inconsequential. Not even you knew of the issue or the potential settlement. What you did do, by filing bankruptcy and seeking protection from creditors seizing and liquidating all of your assets, is pledge that everything you had before filing, is subject to administration by the bankruptcy trustee.

Or, think of it this way. Imagine all this without bankruptcy and its protections. As one of my old -- she's not "old" -- judges would say... it's a pay to play system. If you don't want to pay, then you can't play. (She mostly used it in the context of a Chapter 13, but I think it works for Chapter 7s as well.)

[Barbisi]

Well, justbroke while I can't agree that dutifully filing a second Bk13 in the midst of massive medical bills during a fight for life is something I want to look forward to, I suppose it might be the only way out, since as you say, bankruptcy is the only protection against creditors. I know of many on social media who launch GoFundMe campaigns (i.e. an actor/cosplay performer acquaintance diagnosed with a brain tumor who recently did one and was able to raise some money.), but as a friendless and family less financial failure, I'm sure that wouldn't work out for us LOL!
So I guess, just accept the fact that even with the priciest health and life insurance, that Bk13 debtors may be forced to become repeat offenders, if they live long enough.

[shipo]

Not to derail this discussion on unforeseen medical issues, but it got me thinking about my current situation regarding the dog attack I endured five weeks ago today. It appears there are at least reasonable odds there will be some money left over after my legal and medical bills are payed; based upon the dialog above, I'm thinking had this happened two years ago while I was still in my Chapter 13, any extra monies not earmarked for future medical expenses, might well have gone to my creditors. I know this is kind of a bizarre way to think about things, but from one perspective, I'm "lucky" I got attacked in July of 2021 and not July of 2019.

[justbroke]

Well, justbroke while I can't agree that dutifully filing a second Bk13 in the midst of massive medical bills during a fight for life is something I want to look forward to, I suppose it might be the only way out, since as you say, bankruptcy is the only protection against creditors. I know of many on social media who launch GoFundMe campaigns (i.e. an actor/cosplay performer acquaintance diagnosed with a brain tumor who recently did one and was able to raise some money.), but as a friendless and family less financial failure, I'm sure that wouldn't work out for us LOL!

I'm very impressed by the GoFundMe drives. I think there was one recently where the mother was being evicted and they ended up raising enough to buy her a home (it was hundreds of thousands). But these one-off solutions, such as GoFundMe, won't work in every situation.

So I guess, just accept the fact that even with the priciest health and life insurance, that Bk13 debtors may be forced to become repeat offenders, if they live long enough.

Stay well. Live happens along our journey. During that life-long journey, things happens and we just take them in stride. I filed bankruptcy twice, so there may some truth to what you say (mine caused primarily by taxes not discharged in the Chapter 7).

In the end each person much choose their path. Some choose to go off-grid and avoid creditors, some achieve a settlement with creditors, some try to settle or go into debt-management programs, but many end in bankruptcy.

Bankruptcy is just a tool. It is sharp along its edges, but can extricate the debt in your life. Sometimes, it cuts both ways.

[dj007]

So the first thing she did after receiving the email from the trustee office was to call them and figure if the email was legit, she did not leave her number and instead told the secretary that she would call back. Well today the trustee called her back ( apparently they just used the caller id #) he affirmed that the case is being opened and actually told her to get an attorney to amend the petition or to have such attorney contact him and he would guide him! (odd i know).
She also contacted the court and made some phone calls trying to secure a pro bono atty. No luck there. The court also basically told her that if she was looking to oppose the motion to reopen based on inability to be notified, to write an email to the judge. But based on JB analysis above ( good information and very well explained by the way Thanks) if the cause of action will be taking 2008 then that automatically gives the trustee entitlement and no reason to oppose the motion to reopen. The plan be seems to be amend the petition to claim the most possible exceptions.
Thanks again to all who offered their opinion and information. If any other worthy information is to be shared , I will update the post.

[justbroke]

It may give the Trustee cause to re-open the case and ask that a bar date, to file claims, be set. However, the Trustee was being very nice. Your relative should 100% get an attorney. Seek 3-5 consultations and explain the issue (your relative should do this). The Trustee gave your relative great information that the petition should be amended. The Trustee is (likely) alluding to the fact that the debtor may be able to claim certain exemptions in the proceeds of the settlement.

Those proceeds could certainly cover an attorney's fees. But your relative needs to call around. Since there is a decent amount of $$$, a pro bono attorney is probably not likely. Despite the lack of a pro bono attorney being available, you could find an attorney to do this on contingency (recovering their fee from the proceeds of the settlement). This is why the debtor, your relative, needs to call around to 3-5 attorneys and explain the situation.

This is why your relative 100% needs an attorney.Unless, again, the relative doesn't care if the Trustee takes all of the proceeds whether the creditors deserve it or not. Also, the debtor's attorney may be able to fashion an objection to the re-opening. That objection could be based on whether the Trustee's action would yield no money for the bankruptcy estate (e.g. the available exemptions would 100% cover the proceeds of the settlement and there would be nothing for the bankruptcy estate).