When a person or entity files for bankruptcy, they are attempting to eliminate or repay some or all of their debts under the protection of the federal bankruptcy court. A lawsuit against a person or entity, for all intensive purposes, is considered a “debt.”
By the provisions of 11 U.S.C. § 362, all persons and plaintiffs are enjoined and stayed from commencing or continuing any law suit against the debtor. However, an injured person may still be able to recover money.
A personal injury attorney should file a motion in the bankruptcy court and explain to the court why the personal injury lawsuit should not be stayed or discharged. If a defendant has an insurance policy, a personal injury attorney can agree to limit the recovery to only those insurance proceeds. In this instance, the Bankruptcy Court will likely allow the personal injury action to continue only against the insurance policy and not against the debtor’s personal assets.
Here at Ginarte Gonzaelez Winograd L.L.P., we focus on representing NJ and NY victims of someone else’s negligence and protecting their rights. Call our office at (888)-GINARTE or contact us online for a free consultation and we will make sure your rights are not lost.