Money you receive in an award or settlement is considered personal property for bankruptcy purposes. Whether it is a settlement or a trial verdict, the money you receive to compensate you for an injury will be part of the property in your bankruptcy estate.

The key date to look at is the date of the accident.  If the accident took place before the bankruptcy petition was filed, the claim and therefore the monetary recovery is part of bankruptcy and the settlement or verdict amount may be used to pay back creditors.  If the accident took place after the bankruptcy petition is filed, then the personal injury money is not included in the bankruptcy.  Timing is key!

You MUST disclose any potential claims if they took place before you have completed bankruptcy. When you file for bankruptcy, you will be assigned a bankruptcy trustee. You will have to send the trustee documents such as pay stubs, tax returns, and any information about your assets.

It is the trustee’s job to review your bankruptcy petition and verify the information and calculations using your financial documents and other independent sources. If you do not disclose any potential awards or settlements you could be precluded from proceeding with bankruptcy or even be charged with the crime of fraud.

HOWEVER, you can apply the Florida exemptions to your personal injury settlement.

Florida Exemptions

Florida does not provide a blanket personal injury exemption specific to settlements. However, Florida law does allow you to keep a settlement or verdict if it stems from work in a hazardous occupation.   

A hazardous occupation is defined by Florida law as being any of the following: railroading, operating street railways, generating and selling electricity, telegraph and telephone business, express business, blasting and dynamiting, operating automobiles for public use, boating, when the boat is propelled by steam, gas or electricity.  Otherwise, the “standard” exemptions apply – $1,000 for anything and $4,000 if you do not claim the $4,000 as a homestead exemption.      

The lawyers at WeDeleteDebt.com also practice personal injury and therefore have the knowledge and experience to guide through this process to help you keep as much of your settlement as possible.  If you have any questions, please contact us for assistance!