What if the Defendant Driver who hit me Declares Bankruptcy?

Herndon bike, truck and car crash injury lawyer Doug Landau has been asked:

When a Defendant in a pesonal injury case seeks Bankruptcy Court protection, it can throw a road block in the way of an injured victim’s lawsuit. The experienced trial team at ABRAMS LANDAU has successfully overcome these “road blocks” and secured settlements AND jury verdicts for their clients from their unique, “friendly, not fancy” handicap accessible buildings in the Downtown Historic district of Herndon, Virginia (shown here)

• What happens when the person responsible for my injuries seeks bankruptcy protection?
• When a defendant declares bankruptcy, does that mean I cannot collect any of my losses?
• Does it mean that I can write off my medical bills? When an at fault driver takes the bankruptcy route, does it mean that my case will be in limbo for many years?
• If a dangerous driver declares bankruptcy, after hitting me, does it mean that I’m screwed?
• These are all valid questions.

First, the ABRAMS LANDAU injury team has seen defendants try to find protection through the Federal bankruptcy laws. This happens when the amount of a lawsuit exceeds their insurance, coverages and assets. Lawyer Landau has also seen it where Defendants have other bills and debts that combined, exceed any ability to pay. Doug Landau notes that, “people with significant means generally have a lot of protections in place. They have adequate insurance, not only higher limits automobile policies, but excess, umbrella, and other insurance products to protect their personal property, bank accounts and other valuables.

Where are things get dicey is where the dangerous driver has no insurance, or minimum limits coverage, such that they cannot possibly pay the medical bills, lost wages, and other elements of damages. In this situation, a defendant might try to protect their assets by seeking bankruptcy, claiming that the lawsuit by the injured cyclist, driver or pedestrian, would put them over the top. “

Doug Landau in front of the United States District Court, for the Eastern DIstrict of Virginia, Alexandria Division, where he was secured COurt Orders allowing his injured clients to proceed against a Defendant’s insurance despite the Defendant’s filing for Bankruptcy!

In a case, taken to a jury trial by the ABRAMS LANDAU injury team, the defendant and his wife sought bankruptcy protection after the sheriff served the lawsuit papers on behalf of Landau’s injured client. The defendant & his wife claimed that, despite both being employed (AND well compensated), their bills, credit card debt, and the lawsuit were more than they had the ability to pay with their current incomes, savings and other assets. Doug Landau was able to go to the Federal Court in Alexandria, and get an Order from the Judge allowing him to proceed with the Personal Injury Law suit against the available insurance coverages. In other words, the injured plaintiff was able to go to court, win a jury verdict in Prince William County Circuit Court and collect $300,000, even though the defendant and his wife were able to get protection from the federal bankruptcy court from their other creditors.

Doug Landau has also experienced where the defendant brings in bankruptcy counsel after a verdict. In a well publicized Washington DC premises liability case, where are the plaintiff was horrifically burned at a Shepard‘s Park club September 5th, 1977. After the D. C. Superior Court verdict was brought back in excess of $1 million, the defendant retained a bankruptcy expert. This is because there were three sets of defendants, and some of them had personal assets at stake. In a number of cases where the defendant seeks post-verdict, relief and bankruptcy, the case settles for perhaps less than the full verdict amount, rather than the cost, delays and frustration of continued litigation.

Another question asked is whether or not the plaintiff can simply walk away from their obligation to pay medical bills, and other debts if they defendant in their case declares bankruptcy. The short answer, according to experienced injury Lawyer Doug Landau, is “No.” Just because the defendant:

• has no insurance,
• limited coverage,
• or is in bankruptcy protection,
• does NOT excuse the plaintiff from their primary obligation to pay for medical services that they have received. While the ABRAMS LANDAU injury team has been able to shield clients from dunning letters, collections efforts, and having to pay millions of dollars in medical bills BEFORE their case is resolved, the fact that their defendant seeks bankruptcy protection does not excuse the plaintiff ‘s primary responsibility.

Many ABRAMS LANDAU clients do not have: health insurance, short-term, or long-term disability insurance, or other means of paying for catastrophic medical bills after a bike crash, car collision, or dog attack. In those instances, a client may want to seek bankruptcy protection. If they get a discharge in bankruptcy, then the bills get paid out of the assets, perhaps $.20 on the dollar, but then the bills are discharged and can no longer be claimed in the personal injury case. Doug Landau can still use the bills and the medical findings to show the seriousness of the injuries, but the amounts in the bills are out of the case as far as a line item of damages. That is why it’s important to think deeply about whether or not to pursue bankruptcy as a plaintiff with a personal injury case. It also delays things, and you have to get a discharge from the bankruptcy Judge, because the personal injury action becomes controlled by the trustee in bankruptcy.

Bankruptcy protection sought by a defendant may slow down the proceedings, but if there is insurance applicable to the harm caused by the crash, plaintiff’s counsel can continue the lawsuit and collect as against the insurance proceeds.

When a plaintiff declares bankruptcy, it can discharge medical and other obligations, that then cannot be claimed as line items at Trial.

Bottom line, whenever bankruptcy may be an issue in a case, it is critical to have a legal council who is experienced with these kinds of cases. If you or someone you care about been injured or disabled as a result of an accident and there are questions as to what laws apply, email or call us at ABRAMS LANDAU, Ltd. (703-796-9555).