Re: pending personal injury case

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On 4/06/08, William T. Yadlon, Esq. wrote:
> I have a Chapter 7 client with a pending personal injury
> claim. Will the trustee take over the case and what
> normally happens?

You didn't say what state you were in, If a personal injury
case is exempt it is excluded from the Estate and the Trustee
has no interest.
Whether a personal injury case is exempt or not depends on
whether the federal or state exemptions apply.
I practice in Las Vegas where the state exemptions apply, we
have a limited exemption for personal injury proceeds. So
depending on the Bankruptcy Trustee, some Trustees do not
bother with the case depending on the value- most however
either contact the PI attorney for an opinion regarding value
or hire an attorney to advise the Trustee regarding value and
decides whether to take over the case or not. If the Trustee
decides to take the case he or she either hires an attorney to
pursue the case on behalf of the Estate or hires the original
PI attorney to work on behalf of the Estate with the usual
contingency fee. The fee however is subject to final
bankruptcy court approval.The Trustee usually tries to settle
the case so that creditors get paid.
When your PI client files bankruptcy unfortunately you are
also a creditor to the extent your pre-bankruptcy fees and
costs are unpaid, whether you are a secured creditor depends
on state law regarding perfection of attorneys liens. You
should talk to a bankruptcy attorney in your area or any
attorney that has been there before. Due to the automatic stay
you may not be able to collect what is owed to you
pre-bankruptcy. There is a conflict between your interests and
your client's.
Good Luck.