Filing for Bankruptcy after a Car Accident – What You Need to Know

Filing for bankruptcy is never a good thing as it means you are no longer able to honor any financial obligations you have. Filing for bankruptcy should be the last option but it can be used to get you out of some tough situations, for example when you get involved in a car accident. When you are involved in a car accident, you may be looking for ways to discharge the debts you owe.

Here are a few things you ought to know

What Happens After You File for Bankruptcy?

If you file for chapter 7 bankruptcy after causing an accident, everything you own and are responsible for, including the car accident, becomes classified as property of the bankruptcy estate. In this case, you must include your accident in your bankruptcy petition when you present your case to a bankruptcy attorney.

About the Money

If your lawyer is able to get you some compensation from your car accident, your trustee will likely abandon the case and you will get to keep the money if it is below a certain amount (the amount varies from state to state). On the other hand, if the money is above a certain threshold, the trustee may ask your north Miami beach car accident lawyer to hold the money in escrow.

The trustee may then pursue the case if they believe the value of it is higher than the threshold needed for them to abandon the case. They will then decide whether to accept any settlement offers. After the case is over, the trustee will divide the money between you and your creditors.

Personal Injuries

If you file for bankruptcy after injuring someone in a car accident, it is unlikely that you will get out of honoring any debts that arise. The restrictions that could come into place are usually connected to intoxication or driving under the influence of marijuana.

If you get into an accident while drunk and injure or kill someone, you will be left with the obligation to pay for criminal fines, restitution, court fees and bodily injury to the other party.

Your debts are also not dischargeable if you caused willful or malicious injury to another person.

Property Damage

In most cases, a debtor may let go of any debts for property damaged due to a car accident after you file for bankruptcy. As always, the debts cannot be forgiven if the damage is caused by malicious or willful acts. A good example of this is ramming your junk car into a building because you hate its owner. Although you may have gotten into an accident, the accident stemmed from a malicious or willful act and you will be on the hook for the damages even after you file for bankruptcy.

Talk to Your Lawyer

Although you might have some room to maneuver after you get into an accident and then file for bankruptcy, it is important that you talk to your lawyer to see if the bankruptcy will have any effects on your obligations to pay the necessary damages to the junk car.

Filing for bankruptcy can get you out of some financial obligations. That said, there are some exceptions to this rule and it is important you talk to your lawyer about them. It is also important that you talk to your lawyer to see if you are able to keep your compensation if you have creditors at the time of filing.