Q: If the plaintiff of a chapter 7 bankruptcy is also the plaintiff of an ongoing personal injury settlement what happens?
I realize x amount of funds are exempt but will the personal injury case itself be stopped? What happens with their medical bills regarding the suit and the suit itself?
To be clear, I am in the court process with the defendant on the personal injury lawsuit that happened prior. I know any proceeds will be considered income to the courts but will an automatic stay be placed on a lawsuit that I have where rather than being sued (being the defendant) I am suing (I am the plaintiff)?
For further context, I was/am not at fault for the incident. But (typical to my knowledge), I am being counter sued for suing the defendant. I am really not sure how an automatic stay will affect any of this and any experience/insight is greatly appreciated.
A:
You most probably already have Oklahoma bankruptcy counsel representing you, and he/she would no doubt be your best source of information and advice about these issues, especially because counsel would probably be familiar with the bankruptcy judge and Ch. 7 trustee assigned to your case.
That said, if you are satisfied with the work to date of your personal injury counsel, it behooves you to have the bankruptcy court authorize your employment of that counsel, going forward, as that is a pre-condition to payment of counsel, as well as an authorization.
Your Ch. 7 Trustee steps into your shoes, as the saying goes, with respect to all assets and liabilities. Communicate with that person about what you are doing. The Trustee may join, or take over, your PI claim, or perhaps permit the claim to go forward as is, with an agreement that any recovery be paid to the Trustee.
The bankruptcy stay protects you against any acts by claimants to recover funds from you or your estate, BUT, the holder of any such claim may raise it as a defense to your action. It would be prudent for that claimant to seek relief from stay from the bankruptcy court to assert such claims in the non-bankruptcy court.
Timothy Denison agrees with this answer
A: The Trustee will now manage the personal I jury action as it is property of the estate. The automatic stay will protect you against any creditors once the petition is filed.
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