What Do You Do When the Personal Injury Defendant Files For Bankruptcy?

Posted on Aug 5, 2021 by smithandlee

Regardless of the debt, whether it’s a mortgage, taxes, foreclosure, or court ordered payments, when an individual files for bankruptcy an automatic stay is granted, which prohibits any form of collections, or lawsuit from moving forward until the court either lifts or modifies the stay, or the bankruptcy is discharged.

If you can provide documentation that the defendant will not be financially harmed due to the defendant’s insurance company being responsible for payment of damages incurred in the personal injury lawsuit, the court may agree to either lift the stay or modify it to allow you to move forward with filing suit against the defendant’s insurance carrier. This action takes the financial responsibility off of the defendant and places it with the insurance company. In order to accomplish this, however, you may have to provide strong documentation that while you have overwhelming evidence of your personal injuries at the hands of the defendant, if a stay is not lifted allowing you to move forward with pursing the defendant’s insurance company for personal injury damages, you would be irreparably harmed and your ability to pursue compensation from the insurance company post-bankruptcy would be virtually non-existent. This is referred to as a demonstration showing the court “cause” to lift or modify the automatic stay on your behalf without causing further financial harm to the defendant.

Contact the personal injury attorneys, Smith and Lee in Rockwall today for a consultation regarding your personal injury lawsuit.