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Car Accident Claims in Bankruptcy

Many people considering bankruptcy to eliminate their debt wonder how the court handles car accident claims in bankruptcy. The matter depends on the specific circumstances of an individual's car accident claims and on the type of bankruptcy a person files.

If you are planning to enter bankruptcy with car accident claims, you may want to speak with a lawyer to learn about your rights and your options in court. To connect with a lawyer near you for a free case evaluation, simply fill out this form.

What Happens to Car Accident Claims in Bankruptcy?

Here's a look at the various circumstances that might determine how the court handles car accident claims in bankruptcy.

  • Non-dischargeable car accident claims: In Chapter 7 bankruptcy, the court can forgive a filer’s eligible unsecured debt. Car accident claims are unsecured, but if they result from a DUI (that is, if the claim occurred after an incident in which the filer was driving under the influence), they may not be dischargeable. The U.S. Bankruptcy Code explicitly forbids the discharge of debts associated with DUI violations.
  • Accident claims covered by insurance: If the car accident claims were not related to a DUI incident, the bankruptcy filer’s auto insurance may cover them. In this case, it is unlikely that the claims would play a role in bankruptcy court.
  • Car accident claims in Chapter 13 bankruptcy: Money owed as part of a car accident claim may be included in a Chapter 13 repayment plan.

Car Accident Claims You Collect in Bankruptcy

The other side of this issue is when the bankruptcy filer has collected or will collect money from a car accident claim before or during a bankruptcy case. In these cases, the money collected may be considered part of the bankruptcy estate, meaning that creditors may have access to the funds as part of their debt compensation.

And those who had their vehicle replaced as part of a car accident claim may also have to report it in a specific way to the bankruptcy court.

Get the Facts about Your Car Accident Claims in Bankruptcy

If you’d like to learn more about how car accident claims in bankruptcy may affect your filing, you can speak with a bankruptcy lawyer practicing near you.

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