Personal injury and bankruptcy law have different objectives. In many ways they're distinct. But there are two important times they overlap.

The first is when the injured person files a bankruptcy case.

Once a bankruptcy petition is filed the injured person is at risk of losing control of the personal injury case. It may be taken by the trustee as an asset. If that happens, the injured person doesn’t have decision-making authority and probably won’t get very much of the recovery.

And what sometimes happens is that the personal injury claim isn’t disclosed as an asset in the bankruptcy petition and schedules. If it isn’t disclosed, the defense is going to argue that the plaintiff is judicially estopped from brining the case. That can be a kiss of death.

It’s essential to tell your personal injury attorney if you’ve filed, or are thinking about filing, a bankruptcy petition.

The second is when the negligent driver files a bankruptcy petition.

When does that happen? Usually when the negligent driver doesn’t have enough insurance and has some assets or future income that’s at risk.

When the at-fault driver files a bankruptcy petition, the case comes to a screeching halt. Something called the Automatic Stay descends personal injury. In order to get the case moving forward, you have to get what’s called “relief” from the Automatic Stay from the bankruptcy court. To get that relief you typically have to agree that the personal injury claims are limited to the available insurance proceeds.

I don’t like bankruptcy involvement on either side of a personal injury case. But sometimes the only real “justice” an injured person can get is knowing that the at-fault driver had to file a bankruptcy petition and will effectively have a life-long cloud hanging over their heads.