Injury Claims in Bankruptcy:
Certain assets in your Bankruptcy are considered exempt. That means that when you file a chapter seven case the recovery from Workers Compensation or Personal Injury lawsuits proceeds flows to you free of claims from the bankruptcy court. The exemption is capped by a certain amount but this amount is generous. The most important thing you can do is to make sure that you fully disclose the lawsuit in your bankruptcy petition and to the Bankruptcy Trustee at your 314 meeting of the creditors.
You disclose the lawsuit in your petition by listing it in the section of your petition called the Statement of Financial Affairs. This section asks you to list all lawsuits both civil and criminal. The disclosure requires you to list both the parties to the case, jurisdiction and the case number.
Also the Injury case should be listed as an asset and be listed as exempt if any of the State of Oklahoma exemptions apply. Generally proceeds from workers compensation and personal injury claims are exempt.
If you fail to list the Workers Comp or Personal Injury lawsuit in your petition and latter seek to recover any funds as a result of the claim the Trustee in your case will file an adversary proceeding against you and seek to set aside any discharge you may receive. The basis for his objection is usually that you failed to list the claim for the reason of deceiving the Bankruptcy Court and that to allow the claim or its exemption would cause the Trustee or a creditor to be prejudiced.
If you fail to list the lawsuit act quickly: If you find that you inadvertently failed to list the asset you can amend your schedules to list it correctly. Normally the Bankruptcy Code will liberally allow you to amend at any time but the amendment must not be done so as to cause the Trustee or Bankruptcy Creditors undue prejudice or done to give you an unfair advantage.