Do You Need to Notify the Bankruptcy Court of a Personal Injury Lawsuit?

Yes, if you filing a bankruptcy or currently in a chapter 13 bankruptcy, you must disclose in your schedules that you have a personal injury claim or lawsuit or you may be prohibited from bring your personal injury lawsuit in state court.   Judicial Estoppel is a discretionary equitable legal doctrine that was developed by the Courts to protect the judicial process by prohibiting parties in litigation from deliberately changing their positions depending on their interests.  As the United States Court of Appeals for the 5th Circuit Court in Hotard v. State Farm Fire & Cas. Co., stated, “A party cannot advance one argument and then, for convenience or gamesmanship after that argument has served its purpose, advance a different and inconstant argument.”  286 F. 3rd 815, 818 (2002).  The United States Court of Appeals for the 6th Circuit has described judicial estoppel as “playing fast and loose with the courts, blowing hot and colds as the occasion demands, or having one’s cake and eating it too. “   Reynolds v. Comm’r of Internal Revenue, 861 F2d 469, 472-73 (1988).

Bottom line, if you do not disclose the potential lawsuit to the Bankruptcy Court because you don’t want your creditors to get the proceeds from any settlement or judgment, then you could be barred in your personal injury lawsuit from collecting any money.  Further, there are sometime considerations such as hiring the attorney in your personal injury case to represent the bankruptcy creditors so that the attorney will get paid that need to be correctly done.  Be sure to notify your bankruptcy attorney as soon as you have a personal injury, workers compensation claim or anything where you might be entitled to a lump sum of money.

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