What Happens If The Other Driver Files Bankruptcy in my Car Accident Case?

What Happens If The Other Driver Files Bankruptcy in my Car Accident Case?

The at-fault driver is probably looking for any excuse to get out of making any payment to you. If they were uninsured or underinsured, then you probably took the legal action to a personal level. When you’re working through an insurance claim or a lawsuit, there are a lot of questions. But if you get wind that the other driver filed for bankruptcy, then your biggest question is probably, “Will I even get paid?”

If this situation happens to you, you should call a Beaumont, TX car wreck attorney.

What is Bankruptcy?

Bankruptcy is the legal process of absolving or rearranging debt because you’re financially unable to meet those obligations. There are different degrees of bankruptcy and escaping financial obligations that your family can’t live through.

There’s liquidation, reorganization, adjustment of debts. In some situations, the family will seek to get out of all debt that is excusable, and that includes car accident debt and settlements. Reorganization can reduce the amount that they owe, but it can also restructure the timeliness in which you get paid. Adjustments are exactly what it sounds like. The person may consolidate, you may get paid from them, a company, or you may not receive any of the funds at all.

Will It Impact My Case if the Other Driver Filed for Bankruptcy?

It is very likely that a bankruptcy filing will impact any settlement that’s already been reached. There’s no guarantee on anything that’s in progress, though. It kind of comes down to if the person is using an attorney through their bankruptcy case in which they would probably receive counsel telling them to wait through the car accident case and then file for bankruptcy to get out of the settlement debt.

However, if someone is doing the case on their own, they may not see that opportunity and still owe the settlement debt to you. Whether a bankruptcy from the at-fault driver will impact your case or not depends on a lot of small details within the greater part of your case. It can even depend on whether your case has closed already or not. If your case is still open, then you may be able to take some action to protect your settlement.

Ultimately, this is instances, where you will need to work with an attorney closely and take it slowly. Working through your case day by day may play a big role in understanding how much their bankruptcy will impact you. Additionally, slowing down the process may be advantageous in this situation, whereas usually, people rush to close these for decent settlements.

Will Their Insurance Policy Still Payout?

Insurance policies are largely unaffected by bankruptcy payments as long as that driver kept their policy up to date to the time of the crash. The policy will payout, or could payout, up to the maximum insurance held by the driver. Insurance companies are your best bet when it comes to resolving car accident issues. But, in the event of bankruptcy, it usually means that it’s not worthwhile to go after the individual if the insurance policy doesn’t cover all of your damages.

What About Court Awarded Damages Such as Punitive Damages?

Punitive damages are something that the court awards the victims who are impacted by dangerous drivers. Typically these damages apply to DUI cases or extremely reckless driving situations.

When it comes to punitive damages, they stand apart from other court awards for settlements. These damages represent financial harm to the driver and an award to the victim. Usually, you cannot discharge these debts, and a bankruptcy court would likely hold the driver to paying those obligations.

If the Other Driver Filed for Bankruptcy, Contact a Beaumont, TX Car Accident Lawyer

Brent Coon & Associates spends time with car accident victims, and we understand that some unforeseen life changes such as bankruptcy can lead to many questions. When you’re handling your insurance claim or suing someone individually, it’s never quite clear as to how everything will actually reach a resolution. The good news is you can still pursue your claim even when the other driver is going through substantial financial changes, including filing for bankruptcy.

Now, if you’re suing the driver individually or had a prior award from the individual, you may run into some trouble. During bankruptcy filings, that driver could attempt to have the debts for these claims excused. Debts related to car accidents can be excusable, and that might mean that you may only receive a very small portion of your award or nothing at all. Contact our car wreck law office in Beaumont, Texas today to start protecting your compensation.

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