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What Happens When I Have a Car Accident While in a Chapter 13 ?

Claim for Property Damage to Vehicle

If you are a debtor in a Chapter 13 bankruptcy case and are involved in a motor vehicle accident, there are two major issues that your attorney will have to address. The first issue is the extent of damage to the vehicle. If you have a lien on the vehicle ( an auto loan secured by the vehicle), the lender must be informed about the auto accident. You are required to maintain auto insurance under state law and under the terms of your policy the auto lender will be the "loss payee" if you are at fault in the accident. If the other party is at fault, and your vehicle is damaged, you must provide the information about the other driver and their insurance company to the lender, through your Chapter 13 Attorney. Usually this information is contained in the police report taken on scene. Your auto lender has the right to have its claim paid with any insurance proceeds if your vehicle ( their collateral) is determined to be a total loss.

Claim for Damages for Personal Injury

The other part of an auto accident that is important in your Chapter 13 case is the issue of personal injury. If you have been injured in an auto accident, notify your attorney ( and your insurance company) immediately. Damages for personal injury are determined separately from damages to compensate you for property damage, and the amount of the claim usually in dispute. You should consult with your attorney about the value of your claim, and so that your attorney can file the proper amendments to your bankruptcy schedules to disclose the claim and to take any available exemption under bankruptcy law. The attorney who is handling the personal injury claim, even if it is your Chapter 13 Attorney, must be first appointed by the U.S. Bankruptcy Court. Any settlement of the claim must be approved by the U.S. Bankruptcy Court, and you should anticipate that a portion of the settlement will have to be applied to paying towards your Chapter 13 Plan.

If you have questions about a personal injury case or the bankruptcy laws, Call me. I'll BE there for you. -Kevin M. Ryan, Bankruptcy Attorney.