Bankruptcy affects a personal injury case.
Property of the debtor is defined broadly under The United States Bankruptcy Code to include causes of action which existed at the time of the commencement of the bankruptcy proceeding.
- Santori v. Met Life, 11 A.D.3d 597; 784 N.Y.S.2d 117 (2nd Dept 2004)
- Ochs v Vaul Trust, 2007 NY Slip Op 2913; 2007 N.Y. App. Div. LEXIS 4246 (2nd Dept. , 2007) [ In Ochs, a cause of action was commenced before the filing of the bankruptcy petition]
A debtor has a duty to schedule a cause of action which existed at the time of the commencement of the proceeding as an asset on the bankruptcy petition so that the trustee can determine whether the claim should be abandoned, or administered by the bankruptcy court for the benefit of the creditors.
- Santori v. Met Life, 11 A.D.3d 597; 784 N.Y.S.2d 117 (2nd Dept 2004)
- DiBenedetto v. Hadziyianis, NYLJ 18036/05 (Supreme Court Nassau County September 26, 2006)
- Ochs v Vaul Trust, 2007 NY Slip Op 2913; 2007 N.Y. App. Div. LEXIS 4246 (2nd Dept. , 2007) [In Ochs, the personal injury action as properly listed as an unliquidated contingent claim on Schedule B of the bankruptcy petition, which had the effect of preserving the claim for administration through the bankruptcy court]
- Dynamics Corp. of America v. Marine Midland Bank-New York,, 69 N.Y.2d 191; 505 N.E.2d 601; 513 N.Y.S.2d 91 (1987)
Even though the debtors interest in the personal injury claim is listed at the full $7,500 personal exemption permitted under 11 USC § 522(b)(2), the personal injury claim is not limited to that number and there is no requirement to list on the bankruptcy petition categories of potential damages to preserve the right to recovery beyound the the full $7,500 personal exemption
Upon the filing of the Bankruptcy Petition, the personal injury claim vests in the bankruptcy trustee.
If a debtor fails to list a legal claim as an asset in his or her bankruptcy proceeding, the claim remains the property of the bankruptcy estate and precludes the debtor from pursuing the claim on his or her own behalf. The right to received compensation for personal injuries turns into a no-rght.
- Santori v. Met Life, 11 A.D.3d 597; 784 N.Y.S.2d 117 (2nd Dept 2004)
- DiBenedetto v. Hadziyianis, NYLJ 18036/05 (Supreme Court Nassau CountySeptember 26, 2006)
- Dynamics Corp. of America v. Marine Midland Bank-New York,, 69 N.Y.2d 191; 505 N.E.2d 601; 513 N.Y.S.2d 91 (1987)
If a bankruptcy court has already granted a discharge and the claim was not listed on the schedule of assests, a Petition to vacate the discharge may be made to the bankruptcy court together with an offer to prosecute the action under the bankruptcy court's supervision to ensure that any judgment obtained would inure to the benefit of his creditors.
DiBenedetto v. Hadziyianis, NYLJ 18036/05 (Supreme Court Nassau CountySeptember 26, 2006)
If a claim accures after the commencement of the bankruptcy proceeding, the claim is not part of the bankruptcy estate.
Santori v. Met Life, 11 A.D.3d 597; 784 N.Y.S.2d 117 (2nd Dept 2004) [In Santori, part of the claim survived a bankruptcy because it accrued after the commencement of the bankruptcy petition]