Oklahoma Bankruptcy and Personal Injury Settlements
One of the leading causes of bankruptcy in the United States is medical debt. A sudden illness can dump thousands of dollars in medical bills on an unsuspecting family, ruining even
The question often asked by potential bankruptcy clients in an injury situation is “How does my Oklahoma bankruptcy and personal injury settlements get impacted when I file bankruptcy?” This is an important question, as the money could be thousands of dollars. The answer is that Oklahoma bankruptcy law provides relief for debtors in these unfortunate circumstances in the form of an exemption. Bankruptcy Exemptions are provisions in the bankruptcy laws which allow a debtor to keep certain kinds of property. Exempt property cannot be taken by the trustee and used to pay off creditors. Commonly used exemptions include the homestead exemption, which covers a debtor’s home, vehicle exemptions, and retirement savings exemptions. For personal injury victims, the Oklahoma laws specify that a debtor may exempt his interest in a claim for personal bodily injury, death, or workers’ compensation claim up to $50,000. This protection includes both claims that have yet to be settled, adjudicated, or paid, and claims that have been paid out before the bankruptcy is filed.
For those claims that have been paid out before the bankruptcy filing, however, special precautions must be taken. Only money that can be identified as specifically coming from the settlement or judgment can be exempted. The best way to identify the money is keep it separate from other assets by keeping it in its own separate bank account. That way, when preparing the bankruptcy, the attorney can note that the account is exempted, and can account for all the funds in it. If the money is mixed with other bank accounts or assets that aren’t exempt, it could be taken by the trustee.
It is also important to note what the exemption does not cover. While it covers the claim for injury or death up to $50,000, it does not cover funds in excess of $50,000. So, if a debtor has a claim for $75,000, $25,000 would be subject to seizure by the trustee to pay creditors. It also does not cover awards for exemplary or punitive damage. Suppose, rather than settling, the previous debtor won a judgment of $75,000, with $25,000 for their injury, and $50,000 in punitive damages. The debtor would only be able to exempt the $25,000. While the personal injury exemption is not perfect, it does provide a measure of protection for those who find themselves in dire financial circumstances while waiting for a settlement or judgment.
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Oklahoma Bankruptcy and Personal Injury Settlements
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