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The person who injured me filed bankruptcy. How does this affect my case?

| Oct 1, 2019 | Accident Law, Auto Accident, Blog, Legal Procedures |

A bankruptcy proceeding filed by the party or parties that injured you can result in a stay of your claim. The defendant may be able to stop your lawsuit against them while their bankruptcy is sorted out and you may have to take your claims to the bankruptcy court. If the defendant has insurance, and that insurance is defending the defendant in your lawsuit/claim, you may be able to make a motion to the bankruptcy court for relief from the stay if you agree to limit the scope of your recovery to the defendant’s policy limits.

Alternatively, if your claim against the defendant is based upon fraud, you may be able to pursue an “adversary complaint” against the defendant in the defendant’s bankruptcy. Finally, if you can prove the defendant entered the bankruptcy merely to avoid your claim, you may also be able to file a motion for relief from the stay.

Of course, it may not be practical to pursue the defendant if they lack insurance as collecting upon someone who just went bankrupt may be impossible. Either way, you should not necessarily assume your case is dead because the person you sued filed bankruptcy.