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Personal Injury Claims and Bankruptcy

I am involved in an ongoing personal injury lawsuit in Massachusetts. I am also thinking about filing for bankruptcy. Can any damages I am awarded in my personal injury claim be protected from creditors?

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Some, yes, but the answer depends on the amount and type of damages you collect. For example, under 11 U.S.C. section 522(d)(11)(D) you may be able to exempt up to $20,200 of personal injury damages (excluding pain and suffering or actual out-of-pocket losses). Other sections of the code allow you to exempt other specific types of damages and benefits. And 11 U.S.C. section 522(d)(5), often called the "wild card” exemption, can be used to exempt other damages not specifically mentioned in other sections.

You should definitely talk to both your personal injury attorney and you bankruptcy attorney about your situation before filing for bankruptcy, because, in order to take advantage of these sections, careful drafting of any settlement agreement may be required.

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