Should I file bankruptcy if I'm being sued by a personal injury lawyer?

Auto Accident

You were in a car accident, and it was clearly your fault. On your way to your $15 an hour job, you were looking down at a text message on your phone, and you didn't notice that the traffic light at the intersection had turned red. You broadsided the driver's side door of a compact car, and that driver was injured so badly that she spent a week in the hospital. You had been riding on $100,000 of liability insurance with $10,000 of property damage coverage, but it lapsed. You were cancelled two weeks ago.

After a surgery to put her shattered leg back together, the victim's medical bills are over $50,000, and they continue to grow. Now you've been served with a summons and a lawsuit, and you don't have insurance coverage. After speaking with the injured lady's attorney about your lapsed and cancelled coverage, he confirms that with your insurer. You receive an affidavit of no insurance from him for signature and return, and you comply.

The lady that you broadsided has insurance, and it's with a reputable company. She even had uninsured motorist insurance with a policy limit $300,000. When her lawyer confirmed that you were uninsured, he filed a claim on his client's behalf pursuant to that coverage. Based on the nature and extent of the lady's injuries and the amount of her lost earnings, there's a good chance that she's going to get every penny of her uninsured motorist coverage. Whatever the amount that her insurer pays, it's going to want to recover its loss from you. That's called a subrogation suit, and you've been targeted to be on the receiving end of one.

Is bankruptcy an alternative?

If you're served as the defendant in a subrogation lawsuit, and a large judgment is taken against you, the insurer of the lady who you hit becomes an unsecured creditor. You'll probably be a suitable candidate for protection under the U.S. Bankruptcy Code. Only two conditions would exclude you. If you were found to be under the influence of alcohol or drugs at the time of the accident, the debt to the insurer cannot be discharged. You also wouldn't be eligible for bankruptcy if the act of driving into the side of the victim's vehicle was intentional. Aside from these two exceptions, any judgment that the opposing insurer might take against you will likely be discharged in bankruptcy.

You'll be doing yourself a favor in the future by ignoring your text messages when driving. You'll also want to avoid having your insurance lapse and getting cancelled by your auto insurer. You might not be able to discharge your next accident in bankruptcy. Time limitations apply since the date of your first discharge and the type of bankruptcy you file for the second time around.

Involved in an accident or bankruptcy?

Here are two pages that could help you in the future if you have questions:

  1. Lancaster Banruptcy Lawyer – This page has information on bankruptcy in Lancaster California
  2. Lancaster Car Accident Lawyer – This page has information on vehicle accidents in Lancaster California

This is just a hypothetical situation and is not legal advice.

This article was submitted by Allen Vaysberg of Steers & Associates in California.  For more information, please view his attorney profile here.

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