The truth is yes, you may need to file bankruptcy during a personal injury case. But that’s not necessarily a given. Learn more from Mullen & Mullen.
So you’re severely hurt, and it’s clearly because of someone else’s negligence. You can’t work at all, and it’ll be months before you can start again.
But, your personal injury lawyer tells you it’s still likely going to be months before you recover compensation for your injuries. And there’s no guarantee on that time-frame. You also learn it could be a year, or a couple years, before the legal process finishes.
During that time, all the businesses you owe money to don’t magically say, ”Oh, we’re so sorry to hear you’re not able to work. You know what? Since you’re such a great customer, the next 6 months are on us. Send us a check for the rest when things get better.”
Nope, instead they still demand payment, or they start cutting your services off one by one. And what happens if you can’t make your mortgage payments?
The frustrating part is all this trouble happens because of someone else’s irresponsibility, not your own.
What Do You Do If You’re Injured and Can’t Pay Your Bills?
You’re going to have to do a lot of number crunching and math, depending on how much of your income the injured person in your home provided. And it depends on your cash reserve, and the current level of income you can expect to maintain.
If you can avoid bankruptcy, you do want to, because you lose control of your claim to the bankruptcy trustee in Chapter 7 bankruptcy (your assets can be sold to pay off your debts). In Chapter 13, you are able to keep your property, and you pay all or part of your debts off over 3-5 years.
Remember: It is absolutely imperative that you inform your bankruptcy attorney if you have a personal injury claim and it’s equally important that you inform your personal injury attorney immediately if you have filed bankruptcy.
You’ll also have to get involved with a bankruptcy lawyer and another complicated (and stressful) legal process.
If you can’t pay all your bills, it’s time to become a minimalist. Stop all the services you don’t need. Pay that mortgage first.
It’s lengthy and complex as to what to do specifically (perhaps a whole series of blog posts), so here’s a link to an awesome guide to help you through.
Will You Lose Your House?
No promises can be made. But do be reassured that you will most likely keep your home if you do have to file bankruptcy. However, if you have significant equity in your home, bankruptcy court may decide to sell it to pay your debt.
If you have vehicles with low resale value, you’ll likely be able to keep those as well.
Some Personal Injury Firms Can Help Make This Easier
At Mullen & Mullen, for example, we work with medical providers in Dallas who delay billing until your case resolves. That eases your stress, and makes this difficult time in your life a little easier. But it’s not a common process at most personal injury law firms.