Auto Accident Litigation and Bankruptcy: Which Comes First?

Auto Accident Litigation and Bankruptcy: Which Comes First?

An auto accident can sometimes lead to bankruptcy. Other times you may be facing financial problems which are then aggravated by an auto accident with injury, time off from work, or significant medical bills. The following is an overview of some of the main considerations involved in the timing of the auto accident litigation/bankruptcy equation.

If you have a claim for an auto accident, generally it is best to have the auto accident litigation run its course before you file for bankruptcy. There is a fairly short window of time after an auto accident occurs to file a lawsuit. If you do not file a lawsuit within that window of time, you may very well be cut off from suing for your injuries. There is no statute of limitations on when you can file for bankruptcy, other than limitations on how often you can file multiple bankruptcies.

If you file for bankruptcy before filing an auto accident, you still have to disclose to the bankruptcy court that you have a possible claim for an auto accident. The bankruptcy court will want to know how much money you think you will recover from the auto accident claim. An auto accident claim can take one to two years to resolve in court. The earlier it is in the auto accident litigation, the more difficult it will be for you to determine for the bankruptcy court the value of the auto accident claim.

If you have an auto accident case which is ongoing while you are in bankruptcy, your auto accident attorney needs the bankruptcy court’s permission to continue to represent you in the auto accident case. If you reach a settlement in an auto accident case while you are in bankruptcy, your auto accident attorney needs the bankruptcy court’s permission before he or she can complete the settlement.

Sometimes life does not care what your plans are. Generally it would be best to complete the auto accident litigation first and then proceed to file for bankruptcy. But you may decide to file the bankruptcy first if there is an impending foreclosure sale and you wish to save your home. Filing for bankruptcy will stop a foreclosure sale, an eviction, a utility shutoff, an automobile repossession, or a lawsuit someone else files against you.

The above information is a general overview and is not intended to be used as legal advice. The Law Offices of Joumana Kayrouz has a number of attorneys each of whom specialize in a different area of the law. If you are considering filing for bankruptcy and/or an auto accident claim, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your unique circumstances.

By: Michael Benkstein, Esq.

Managing Attorney, Bankruptcy Department

The Law Offices of Joumana Kayrouz, PLLC

1000 Town Center

Suite 800

Southfield, MI 48075

(phone) 248-557-3645

(fax) 248-200-0645


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