Across North Florida, there are people from every walk of life, making a living for themselves. Financial struggles throw a wrench in the plan of any individual but adding in a personal injury claim only adds to the difficulty. For most people in this situation, their biggest concern is whether they will be able to keep their personal injury settlement in the bankruptcy. The answer lies in understanding whether your arrangement is eligible for a personal injury settlement exemption.
Personal Injury Settlement Exemption
State and federal exemptions exist to help debtors protect some or all of their claim compensation, both for chapter 7 and chapter 13 bankruptcy. For residents in Florida, the federal exemptions do not apply, but rather you are required to use the Florida exemptions in your bankruptcy. These exemptions only apply to those who have lived here for at least two years. While Florida does not offer a blanket personal injury exemption, the law does provide you with all of the settlement money if your injury occurred working in a hazardous occupation.
Florida provides a series of other exemptions that may apply to your situation. These include the wildcard exemption that protects your personal property up to $1,000 and the homestead exemption if you are renting. This exemption allows you to protect an additional $4,000.
Typically, as a rule of thumb, a debtor can claim approximately $20,000 of compensation received for a bodily injury as exempt from the bankruptcy proceedings. However, any additional compensation received for emotional pain and suffering may not be claimed as exempt. An experienced attorney can help you maximize the amount of the personal injury claim’s value you can keep by utilizing all available federal exemptions.
Chapter 7 VS. Chapter 13 Bankruptcy
When an individual files bankruptcy, they are legally obligated to report all properties and assets, and this includes personal injury claims. The chapter of bankruptcy a person files further dictates how their personal injury compensation is treated:
If the lawsuit or claim amount is likely to be more than the amount eligible for the exemption, the trustee will collect the money, disburse the exempt portion to the debtor, and use the remainder of funds to pay creditors. If any funds remain, the trustee will return them to the debtor.
In a Chapter 13 bankruptcy, a debtor is usually required to change their repayment plan to account for the additional funds, and then turn over any nonexempt funds to creditors.
Parker & DuFresne
If you are struggling with the decision to file for bankruptcy in Florida, you need guidance from an attorney you trust. Add on a personal injury claim, and there is only one law firm you should turn to, and that is Parker & DuFresne. We specialize in bankruptcy law, and we offer a positive approach at a difficult time. If you have been injured and are facing personal bankruptcy, our firm can help. Through a thorough consultation, we’ll help you determine if bankruptcy is the right solution for you and develop the legal strategy that’s right for your case. Contact us today.