13 Aug Why Has a Motion for Relief From Stay Been Filed Against Me by the Driver I Hit in a Recent Car Accident?
Back in April, I wrote a post on this blog entitled “Am I Responsible for Car Accident Damages in Excess of Insurance Coverage” when I file for bankruptcy. That post primarily concerned Chapter 7 and my conclusion was that in most instances a Chapter 7 discharge will eliminate personal liability for defendants in personal injury lawsuits.
Auto accidents and other personal injury claims don’t always happen when it is convenient, such as prior to a Chapter 7 filing. In fact, during my 20+ years as a consumer bankruptcy lawyer, I have seen several instances in which a personal injury claim arises prior to a Chapter 13 case, or even during a Chapter 13 case. What happens then?
In this post I’d like to discuss what happens when a Chapter 13 debtor has to deal with a personal injury claim that arose before the Chapter 13 filing.
First, if there is a personal injury liability claim pending against you, you must reveal this claim to your bankruptcy lawyer and disclose it in your petition.
Your lawyer will have to decide how to deal with the personal injury claim in your plan. By nature, injury claims are “unliquidated,” which means that no one knows exactly how much the claim will be. This is obviously a problem in a Chapter 13 case, which is a payment plan that can last only five years. It is one thing to account for a $10,000 debt, but something else entirely to account for a $100,000 debt.
In my practice, I deal with this problem by looking at the insurance coverage that protects my client. If ther is no insurance coverage, a whole different set of problems arise, so for purposes of this blog post, I will assume that the defendant/debtor has insurance.
In the Northern District of Georgia, where I practice, I do not provide for funding of the liability claim in my plan. Instead, I contact both the plaintiff’s and defendant’s counsel in order to get a sense of whether the available insurance is sufficient to cover the claim. If so, I will encourage the plaintiff’s counsel to file a Motion for Relief from Stay for the sole purpose of proceeding against insurance coverage. The Consent Order on this Motion will provide that the defendant/debtor has no personal liability that will accrue to the debtor or that needs to be funded in the plan.
Not unexpectedly, I will get a call -and sometimes a frantic call – from my client asking why a motion for relief has been filed, regardless of how much I try to prepare my client for this pleading. The consent order on this type of motion for relief serves to protect my clients from unknown liability and chapter 13 plan disruption.
Jonathan Ginsberg, Esq.
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