I recently was awarded a settlement on a personal injury case that I had pending before I filed bankruptcy. In my 341 Hearing, I disclosed the injury case that I had filed 2 years prior. A year after my bankruptcy, I was awarded a settlement that the trustee now wants to take from me. Is this legal even though I disclosed it? I haven't been notified by the trustee telling me why I couldn't get my settlement money and my bankruptcy attorney said nothing can be done and not to stir the pot. Why can't I know where my money is going and why they're taking it? Why would I risk losing any portion of a settlement if I did nothing wrong? I'd rather pay my debts with my settlement but my attorney says I can't reverse my bankruptcy. Is there someone I should talk to about this without causing havoc?
Your attorney is familiar with your case and what was exempted and what can be exempted under IL law. You really need to talk with your attorney about what is going on. What can be exempted differs from state to state and what matters is what you can exempt under the state law which governs your case AND what was actually claimed as exempt. Merely disclosing is not enough to claim some asset such as your PI claim as exempt. You actually have to claim it as exempt. Your attorney will know this. We don't.
It is good that you disclosed it, not doing so would have been the basis for a charge of bankruptcy fraud. However the exemptions are what they are, and you cannot keep property that is not exempt.
It seems like we are talking about a chapter 7 bankruptcy. The other responders have addressed the issue regarding assets, as for reversing the bankruptcy, that is not likely to happen. There is legal basis for a debtor (you) to voluntarily dismiss (reverse) a chapter 7 bankruptcy once filed. Especially if non-exempt assets are involved, the trustee would object to any motion to dismiss. Unfortunately, you can't really unring the bankruptcy bell, especially this far into it.
You can always consult with a different bankruptcy. You may need to pay the attorney some money to spend the time to review your case, but it may be worth it to get a 2nd opinion.
If you disclosed the pending personal injury claim on your Chapter 7 petition and schedules, then you should also have taken an exemption on your schedules for a personal injury claim. You can exempt $15,000 of a personal injury claim in Illinois in a Chapter 7 case. The trustee can gobble up any claim settlement over that amount, unless you used a portion of the wildcard exemption in addition to the $15000 injury claim exemption. There is no free lunch here. This should have been explained to you when you filed your Chapter 7 case. You cannot bankrupt the debt to your creditors, and then keep settlement funds over and above the exemption amounts. That is why you are losing a portion of the settlement here. The trustee has a duty to maximize the value of the estate. This potential outcome should have been explained to you when you filed the Chapter 7 case. The trustee will remit the exempt portion of the settlement funds to you after the settlement is remitted to the trustee from the insurance company.
Ahmad Tayseer SulaimanForeclosure AttorneyOak Brook, IL ·
You could exempt 15k. More importantly if you disclosed it and the trustee did in fact abandon it and the discharge was issued then you should get it all. Seek a second opinion.
Joseph Michael OlsteinBankruptcy AttorneyChicago, IL ·
The key for your question is whether the Bankruptcy Trustee issued a no asset report. If they did, then you might be entitled to your entire settlement. Also, you need to determine if the lawsuit was disclosed on your schedules.
In either case, you are entitled to a $15,000.00 personal injury exemption, and you might be able to apply some of your wildcard exemption. It might be prudent to contact your attorney and determine if the Trustee filed a no asset report. I wish you the best of luck.
tephen J. CostelloBankruptcy AttorneyCarpentersville, IL ·
There is a lot in this question. If you disclosed the injury case and the case was closed, there is a good argument that the trustee can't now take it. If the case was not closed, then the trustee has an interest subject to your exemptions which others have discussed. I would guess the case was not closed but its no more than a wild guess. Ask your lawyer.
In cases like this, when I have had clients with the same sentiments as you, I usually talk them into keeping the chapter 7, but it depends. How much is the settlement? In order for creditors to get paid, they must file claims. The trustee must cause to be issued a notice of the final date for claims to be filed. It is very common that many creditors do not file claims. So you may benefit from this case. Much depends on the math as far as how much is your injury settlement, how much in debt was there and who filed claims. It is most important to know if the case had been closed. If you doubt your lawyer, it does not hurt to get another opinion.
