Pre-settlement funding provides much-needed relief during a personal injury lawsuit, but if you’re also dealing with bankruptcy, the situation can get confusing.
If someone failed to keep their premises safe and caused you injury, you may need to apply for pre-settlement funding to cover legal costs. Litigation is a resource-draining process, leaving people with mounting medical bills and the prospect of going bankrupt. Keep reading to learn:
- How bankruptcy can affect your eligibility for pre-settlement funding.
- Whether federal law exempts some or all of your personal injury compensation from your bankruptcy estate.
- How pre-settlement funding works if you have a discharged bankruptcy on your record.
This article will equip you with the knowledge necessary to make better decisions about navigating the legal process and seeking funding.
Bankruptcy and Personal Injury Laws
If you’re facing bankruptcy and pursuing a personal injury claim, you must disclose how much you expect to win.[1] If you don’t, you’re at risk of committing bankruptcy fraud.[1]
Additionally, we calculate how much to lend cases that qualify for funding based on the amount of compensation your lawyer thinks you can win. The anticipated compensation might be fully or partially exempt from your bankruptcy estate, depending on the amount and laws in your jurisdiction.
Exempted Amounts in Bankruptcy
Every 3 years, the courts update federal bankruptcy exemption rates.[2] The most recent adjustments took effect on April 1, 2022, and remain in place until April 1, 2025.[2] Keep in mind that states have their own exemption rules that can override federal ones.[2]
Here’s a list of selected exempted amounts in bankruptcy:[3]
- Personal injury claims: Up to $27,900 (excluding pain and suffering) under § 522(d)(11)(D).[3]
- Compensation for the loss of future earnings needed for support
- Recovery for the wrongful death of someone you relied on for support
- All monies received because you were a crime victim
- Homestead: $27,900 under § 522(d)(1).[3]
- Motor vehicle: $4,450 under § 522(d)(2).[3]
- Household goods: Per item limit of $700 and an aggregate limit of $14,875 under § 522(d)(3).[3]
- Jewelry: $1,875 under § 522(d)(4).[3]
- Tools of the trade: $2,800 under § 522(d)(6).[3]
- Unmatured Life Insurance: $14,875 under § 522(d)(8).[3]
Laws surrounding bankruptcy and personal injury are very complex, and you should work closely with an attorney before making any decisions.[4] The pre-settlement funding you can get from USClaims depends on the final amount you receive, not the full anticipated amount before factoring in bankruptcy.
Can I Apply If My Bankruptcy Was Discharged?
If you receive a discharge from a Chapter 7 or Chapter 13 bankruptcy, all compensation is yours to keep, and you can apply for pre-settlement funding.[5] Discharged bankruptcies won’t impact your eligibility because your creditors no longer have any claim over your personal injury settlement compensation.[5]
Navigating Pre-Settlement Funding During Bankruptcy:
Here’s a guide to help you apply for pre-settlement funding during bankruptcy:
- Review court requirements:
- Chapter 7: In some cases, you may not need to get court approval for pre-settlement funding. However, you must inform the bankruptcy trustee about pending personal injury claims and your intent to seek funding. The trustee can manage funds if you receive them before closing your bankruptcy case.[5]
- Chapter 13: In most instances, you must obtain approval before applying for pre-settlement funding. The court assesses how the funds will impact your repayment plan and whether approval is in your creditors’ best interests.[1][5]
To find out how long it takes for pre-settlement funds to become available, visit the pre-settlement funding timeline. Get quick answers to questions about your funding options on our settlement funding FAQ page.
Should I Speak to an Attorney?
We require all our clients to have legal representation from an attorney. Our funding team works closely with them to thoroughly examine the details of your case to determine your eligibility and the potential amount of lawsuit funding available to you.
For more insights into how attorneys perceive our services and the impact of lawsuit funding on their clients, you can explore our collection of attorney testimonials.
Not Sure How to Pay Your Bills After a Personal Injury? USClaims Can Help
Prolonged legal battles strain every part of your life. Pre-settlement funding serves as a lifeline, covering essential expenses such as medical bills, living costs, and whatever else you need to spend it on.
The team here at USClaims goes over and above to maximize the potential funding amount available to you, and funds are available within 24 hours once you’re approved. Choose us and protect yourself from the pressures of settling early due to financial constraints.
Apply today or call us at 1-877-USCLAIMS to learn more about how USClaims can help you bridge the financial gap while pursuing justice.
The availability of pre-settlement funding varies by state. Contact USClaims for more information.
Sources
- “The Impact of Bankruptcy on Your Personal Injury Claim.” www.nolo.com, 5 May 2023, www.nolo.com/legal-encyclopedia/what-if-the-defendant-in-my-personal-injury-case-files-for-bankruptcy.html.
- “Adjustment of Certain Dollar Amounts in the Bankruptcy Code.” Federal Register, 4 Feb. 2022, www.federalregister.gov/documents/2022/02/04/2022-02299/adjustment-of-certain-dollar-amounts-in-the-bankruptcy-code.
- “11 U.S. Code § 522 – Exemptions.” LII / Legal Information Institute, www.law.cornell.edu/uscode/text/11/522.
- April 1 Increase of Federal Bankruptcy Exemptions, Other Dollar Amounts | NCLC Digital Library. 22 Mar. 2022, library.nclc.org/article/april-1-increase-federal-bankruptcy-exemptions-other-dollar-amounts.
- “Discharge in Bankruptcy – Bankruptcy Basics.” United States Courts, www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/discharge-bankruptcy-bankruptcy-basics.