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Bankruptcy & your Lawsuit

Lizy SantiagoMany people who have filed a drug injury lawsuit against a pharmaceutical company are also dealing with financial woes. A person with a drug injury case has often sustained substantial medical costs as well as work loss, all of which can lead to near-catastrophic financial difficulties. Many people who find themselves in such a position have consider or will consider filing bankruptcy.  For many in such a situation, bankruptcy could cause more problems than it solves. It might not be the best course of action.

Anyone who has filed a lawsuit must report the suit in any bankruptcy filings, as a lawsuit is considered an asset in a bankruptcy. Therefore, any funds won in such a suit will first be subject to the bankruptcy filings. In addition, it is improper when filing bankruptcy not to disclose a drug lawsuit if one intends to file one after filing bankruptcy. Failure to disclose a lawsuit – whether it is already filed or whether one intends to file one after filing bankruptcy – in the course of a bankruptcy filing can lead to complete forfeiture of any lawsuit compensation and even further financial penalties.

Attorney Lizy Santiago of Matthews & Associates said that she has seen dozens of cases where people have filed bankruptcy before filing a drug injury lawsuit, or they have filed a lawsuit after filing bankruptcy believing that any proceeds from the lawsuit will not be affected by the bankruptcy. One must tread carefully here, she cautioned.

“Anyone failing to disclose a lawsuit to a bankruptcy trustee will likely live to regret it,” said Ms. Santiago. “It is not honest. It’s not proper. I have seen many people badly disappointed or even made angry when they discover they must disclose a lawsuit in a bankruptcy, but that is the law, and we must all follow it.”

As a general rule of thumb, filing bankruptcy is often a bad idea for someone engaged in a drug injury lawsuit, but everybody and every case is different. We can say this:  Be very wary of filing bankruptcy at any time, for any reason.  Go easy. Speak to a financial adviser. We know that consulting any expert can sometimes be akin to consulting a crystal ball, but there are “experts” for everything in this life, people who have spent much of their adult lives studying their particular discipline.

We can only say that the answer to the question of whether or not to file for bankruptcy would need to start with an expert who really has the time to devote to an up-close examination of an individual’s personal financial profile and prospective long-term welfare.

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