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Bankruptcy News: Personal Injury Claims

When filing for bankruptcy, regardless of what chapter of bankruptcy you are filing, you must disclose in your Petition if you have any pending claims. In laymen’s terms, this means that if you have any reason to file a lawsuit against any person or entity, such as against a business because you slipped and fell while in their store, you must inform the Bankruptcy Court. The reason for this is any money you might be entitled to recover from said person or entity for any harm they caused you will most likely be considered a part of your bankruptcy estate and distributed to your creditors.

Properly disclosing a possible claim was recently considered by the Illinois Second District Appellate Court. Prior to filing bankruptcy, the Debtor in question was visiting a store. While in the store, another customer caused some of the store’s inventory to be knocked over, which then fell onto the Debtor. As a result, the Debtor was injured and later had to have surgery. Shortly after having surgery, the Debtor filed a Chapter 7 Bankruptcy and did not list any pending claims in his Bankruptcy Petition. However, the Debtor later amended his Bankruptcy Petition to include a possible pending claim for around $15,000.00.

Approximately six months after the Debtor received his Bankruptcy Discharge he filed a lawsuit against the store for the injuries he had sustained before he filed bankruptcy. The store responded by filing a Motion for Summary Judgment and argued that the Debtor should have fully disclosed the possible claim in his Bankruptcy Petition. Since the Debtor did not fully disclose the possible claim in his Bankruptcy Petition, he was trying to defraud the Bankruptcy Court.

The Debtor defended the Motion for Summary Judgment by arguing that, at the time he filed the bankruptcy, he did not know whether or not he was going to bring the subject lawsuit due to the amount of stress it would cause him, not knowing whether or not he would win, and the cost.

The Circuit Court agreed with the store on the basis that the Debtor took two conflicting positions regarding the claim in his Bankruptcy Petition and then in the Circuit Court action. This is referred to as the doctrine of estoppel, which prevents someone from making an allegation in one legal action and later contradicting it in another legal action. The Debtor appealed, and the ruling was overturned.

The Circuit Court decision was overturned by the Illinois Second District Appellate Court on the basis that the Debtor had to have actually tried to defraud the Bankruptcy Court, and the actions of the Debtor did not have this intent. While the Debtor probably should have provided more details to the Bankruptcy Court, this was most likely just a simple mistake since the Debtor did inform the Bankruptcy Court of a possible claim as well as the possible nature of that claim.

The Debtor, in this case, could have had a much different result, which is why it is so important to engage the services of an experienced Bankruptcy Attorney when filing bankruptcy. An experienced attorney will help you in deciphering everything you must disclose to the Bankruptcy Court in order to prevent possible claims of fraud or helping you time the filing of your bankruptcy so that you can pursue possible claims and not lose any money won. Contact the Law Office of David M. Goldman in Jacksonville, Florida at (904) 685-1200 for a free initial consultation.

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