How Bankruptcy Can Impact a Wrongful Death Award or Settlement in Georgia

Losing a loved one is painful enough without having to worry about financial complications impacting a wrongful death claim. Unfortunately, if the deceased or their family has declared bankruptcy, it can affect a wrongful death award or settlement, especially in Georgia. This guide breaks down the key things to know.

What is a Wrongful Death Claim?

A wrongful death claim in Atlanta, GA seeks compensation for the family members’ loss after someone is killed due to another party’s negligence or misconduct. The claim is filed by the executor of the deceased person’s estate or an administrator on behalf of financially dependent survivors who are suffering without that financial and emotional support.

Damages in a wrongful death case compensate for losses like:

  • Loss of future income the deceased would have earned
  • Loss of services, guidance, care, protection and assistance they used to provide
  • Funeral and burial expenses
  • Pain and suffering of survivors

The damages awarded in a wrongful death case go into the probate estate to be distributed to survivors based on state laws.

How Bankruptcy Affects Wrongful Death Claims

If the deceased person or one of the surviving dependents has an open bankruptcy case or has previously filed bankruptcy, it can significantly impact a wrongful death claim and award, specifically:

The Bankruptcy Estate Takes Priority

When someone files for bankruptcy protection, a bankruptcy estate is created consisting of all their assets. Any future assets they acquire before the bankruptcy case closes also fall under the bankruptcy trustee’s control for creditor repayment.

So, if the deceased already had an open bankruptcy, any wrongful death settlement would be considered a future asset and given to the trustee to pay debts first before survivors. Even if dependents file bankruptcy after the death, their portion could go to repay creditors.

Special Exemptions in Georgia

Georgia does allow for some wrongful death proceeds to be exempted in bankruptcy so survivors can still recover damages, even if they or the deceased had filed bankruptcy previously. Up to $10,000 in personal injury proceeds can be exempted from a bankruptcy case. Another $1,200 can exempted under the wildcard exemption. While helpful, it still means creditors get priority for any amounts above the allowed exemptions.

The Trustee Can Sue on Behalf of The Estate

Even if none of the immediate survivors filed bankruptcy, if the deceased had an open bankruptcy case at the time of death, the bankruptcy trustee essentially steps into the shoes of a personal representative and has authority to bring a wrongful death suit against negligent parties on behalf of the deceased’s bankruptcy estate.

Any proceeds then pay outstanding debts first before anything passes to the probate estate for survivors. So, dependents lose control over the case.

Timing Matters

Whether bankruptcy impacts a wrongful death claim often depends on timing. For example:

If the deceased individual had previously filed bankruptcy, but the case was already closed with all debts settled by the time they died, bankruptcy may not affect survivors’ recovery.

If dependents file bankruptcy after already reaching a wrongful death settlement or obtaining a judgment, they may be able to fully exempt the entire proceeds amount that passed through probate and was rightly distributed to them. By then, it is usually no longer part of the bankruptcy estate.

Can Wrongful Death Proceeds Pay Debts?

Unfortunately, yes, bankruptcy gives trustees power to take wrongful death proceeds to repay debts, although state law exemptions like Georgia’s can allow survivors to still recover some damages.

It gets complicated when multiple dependents – including minor children – file separate bankruptcy cases. Then each case trustee tries maximizing wrongful death proceeds to pay each individual’s creditor debts first before anything is left over for the person.

Additional Considerations with Bankruptcy and Wrongful Death Claims

Here are some other issues to keep in mind around bankruptcy complicating wrongful death cases:

Meeting Deadlines

Wrongful death cases come with strict statutes of limitations defining deadlines to take legal action. However, an open bankruptcy case – whether filed previously by the deceased or currently by dependents – could eat up significant time negotiating with trustees about the right to bring a wrongful death suit and settlement exemptions. This makes meeting the state’s strict wrongful death filing deadline harder. An experienced personal injury lawyer helps navigate this.

Seeking Exemptions Takes Expert Navigating

Trying to exempt more wrongful death proceeds than your state exempts requires formally filing court motions and negotiating with bankruptcy trustees. Mere exemption claims often won’t cut it. The trustee still takes higher priority. Complex exemption legal wrangling takes deft expertise.

High Burden of Proof with Damages

Beyond issues around recovering proceeds, bankruptcy can negatively impact the wrongful death case itself. Namely, dependents already dealing with bankruptcy will likely endure intense scrutiny of their “damages” and alleged surviving financial dependency on the deceased. Defense attorneys portray reduced dependency given existing bankruptcy. This makes documenting damages details essential upfront.

The Perfect Storm

When multiple family members declare separate bankruptcy cases while simultaneously pursuing a wrongful death suit, navigating repayments, exemptions, damaged claims, and actually winning a fair settlement award becomes exponentially more complex. Having an attorney well-versed in aligning all these areas is invaluable.

Consult a Lawyer if You Are Facing Bankruptcy Impacting a Wrongful Death Claim

The intersection between bankruptcy law and wrongful death claims is extremely complicated. The timing, specific exemptions, and qualifying dependents make each case unique when bankruptcy is involved with a wrongful death settlement. Don’t assume you must sacrifice your valid wrongful death claim just because bankruptcy complications arise. Instead, consult a knowledgeable personal injury lawyer as quickly as possible. They have experience shielding wrongful death cases when bankruptcy issues emerge. An attorney passionately protects both your family’s loss while also upholding your financial rights.

With offices in 32 locations across 19 states including Georgia, Alabama and South Carolina, we can help you with your wrongful death claim, even if you are also facing bankruptcy. Visit us at one of our offices or contact us for a free consultation on (888) 477-0597.

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