If I am awarded monies in a civil case as result of injuries from a cited automobile driver, can the driver simply claim bankruptcy to avoid paying?

I was struck by SUV while cycling. Medical bills and lost wages are already exceeding 100K that cited driver’s insurance company wants to pay out. Of course, I loose right for further litigation by accepting payout. I am being told if I win in a court case against the driver, the driver will probably just file bankruptcy. As a result, I will receive no money at all. Is this factual? Does this happen frequently with PI cases?

Asked on February 28, 2012 under Accident Law, Florida

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If the case is settled with the insurance company, NO lawsuit is filed.  If the case is NOT settled with the insurance company, you will need to file your lawsuit for negligence against the at-fault party prior to the expiration of the applicable statute of limitations or you will lose your rights forever in the matter.  It is possible that if you obtain a judgment against the at-fault party, that person could file bankruptcy and you would not collect anything.  If the insurance company is paying the claim, this would not be an issue.  If the individual is paying the amount of the judgment, bankruptcy is a possibility.  If your damages exceed policy limits, there is a risk that the amount for which you are suing the at-fault party might result in a judgment the at-fault party cannot pay and files bankruptcy.

In answer to your question, does this happen frequently in PI cases, I would say no, because most cases are settled with the insurance company.  If they are not settled and the policy limit is sufficient to pay a judgment, then this does not occur.  If the policy limit is insufficient and the at-fault party has to pay the judgment, then bankruptcy might be the result.


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