Law Office of Timothy E. Wilfong, LLC

You Deserve a Fresh Start - Phoenixville, PA


Call us at 610-935-5555 for a Consultation

Helping Clients Since 2008


 
 
 
Law Office of Timothy E. Wilfong, LLC
20 S. Main Street, Phoenixville, PA 19460
 
 
Should I file bankruptcy if I'm expecting a settlement from a lawsuit?
 

 
 
You Deserve a Fresh Start
 

Should I file bankruptcy if I'm expecting a settlement from a lawsuit?

Individuals must list all claims they may have against any person or entity.  This includes but is not limited to personal injury lawsuits.  It does not matter whether a lawsuit was filed or not.  Normally, the bankruptcy trustee will keep a person's case open until the lawsuit pays out.  Then the trustee distributes the funds evenly to the unsecured creditors. Sometimes an individual can keep all or part of the award depending upon the amount of funds and the type of lawsuit.
 
If an individual has a claim against someone else and has not filed a lawsuit yet, then he or she must still list the claim.  The bankruptcy trustee has the authority to hire an attorney to pursue your lawsuit for the benefit of your creditors.  Furthermore, if a person fails to list their claim as an asset then the Court will disallow them from filing a lawsuit later. This is called "res judicata."
 
This has serious planning implications for someone considering filing bankruptcy especially if the settlement is from a personal injury suit. Common sense dictates if an individual believes he or she can win a large personal injury award then there is not necessarily a need to file bankruptcy.  The injured person can deal with his creditors directly.  However, some individuals will still need to file depending upon their circumstances.
 
If you are considering filing bankruptcy then please contact the Law Office of Timothy E. Wilfong, LLC at 610-935-5555 to review your options.