By Kitty J. Lin
The impact of a car accident may be emotionally and physically devastating. It is even more devastating when it has been determined the car accident was entirely or even partially your fault. What happens when you are underinsured or not insured at the time of the accident? The impact of such an event may cause your finances to spin out of control.
If you are financially responsible for a car accident you need to take a look into all the options that are available for you. One of the options is that you may be able to file for bankruptcy to discharge those debts depending on your circumstances. Normally your debts related to a car accident are dischargeable. This is true whether the debts are related to personal injury or property damage. There are two exceptions where the debts arising from a car accident are not dischargeable in bankruptcy. Many bankruptcy lawyers mistakenly believe that any debt incurred resulting from a car accident, whether insured or not, is not dischargeable when filing bankruptcy.
The first exception is if the accident was the result of you driving under the influence and you caused a death or personal injury to the other party or parties. Your financial obligations to pay any criminal fines, court fees, restitution, and bodily injury to the other party are not dischargeable if it is the result of a DUI. That means you would need to pay for the debts yourself. The only portion of your debts that would be dischargeable is property damage related to the DUI.
The other exception is if the accident was the result of a willful or malicious injury caused by you to another entity or to the property of another entity. An example of this could be if you deliberately ran your car into your neighbor’s fence because you hated the sight of the fence. Under this exception, both personal injury and property damage are not dischargeable in bankruptcy.
So what happens if you are financially responsible for the debts caused by a DUI or your willful or malicious injury to another person and you do not have the funds to repay the debt? Although the debts are not dischargeable in a Chapter 7 bankruptcy you can file a Chapter 13 to repay the debts in installments of up to five (5) years. If the debts cannot be repaid within the 5 years due to your financial circumstances you may always file another Chapter 13 bankruptcy to pay the remaining balance.
If you owe a debt related to a DUI or willful or malicious injury it is best to seek the advice of experienced bankruptcy attorneys. They will be able to draft a Chapter 13 plan that will help you repay the debts and hopefully you can move on with your life.