How to Get a Judgment Award from a Business in Bankruptcy Proceedings

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When someone has been injured while working at a company, it is important that he or she is able to recover from these incidents. However, if the business is going through bankruptcy, this may cause complications or lead to an impossible situation where the judgment award may not be collected.?

When the lawsuit has been successful, a judgment award is provided to the victim of an incident at work. However, the courts usually cannot force the company to pay the amount, and it is up to the individual to attempt collection. This is often much easier when the organization is established and has income accruing. However, if the owner has initiated bankruptcy procedures, it may not be possible to collect the awards. It is important to contact a lawyer to see if there are any certain ways that these funds may be acquired. He or she may already have a strategy in place.

The type of bankruptcy matters in these situations. If the filing is for Chapter 11, this could only be a reorganization of the structure of the company. The excess debts are discarded while the overall business remains. This could mean the award is only awaiting this to be completed. However, some companies use this method to hide assets and attempt to avoid paying the victim what he or she is owed. If this is the case, a legal representative may be needed to discover these issues. This may mean considering other factors and communicating with a lawyer so that it is possible to later collect the monies owed.

Complications in Awards being Paid

If the company’s property is protected, this means that federal and state laws may be keeping the personal assets of the owner safe from litigation. While the property of the company may be sought, this may not be possible if the bankruptcy process leaves no assets once completed. The personal items and real estate of the company owner could also be protected up to a certain amount based on state exemptions. It is important to research this through local databases and public records. Then, the individual owed may determine if action is necessary or not feasible.

Other items may also be exempt from collecting. This could extend to large assets, real estate, vehicles and similar property. If there is a vehicle exemption, the owner’s own car could be protected from litigation actions. This is often part of state laws around the country. However, even if the automobile is not exempt, there could be a loan that reduces the value to less than desirable amounts. If the bankruptcy is a Chapter 7 filing, the company could issue the person awarded a judgment as a creditor and have him or her removed from repayment. There are exceptions, but they usually involve family or those harmed directly by the owner.

Garnishments and Other Access

If the company or owner responsible for the awarded judgment has regular wages that could be garnished, this may be route of accessing the monies that are owed. While his or her personal assets may be restricted from these actions, his or her wages may be accessible for the person in certain circumstances. However, both the federal and state governments limit how much income may be garnished in this manner. Other such income that is tied to programs such as Social Security is exempt from this. Other common collection sources could be possible through bank accounts, stocks and bonds.

When the person assets are within the means of collection, real estate could be obtained and sold by the person owed the award. When the state or federal government have not excluded these items, it is possible to seek a resolution to these matters through equity in residence, real estate and other property. This could be a direct option or with a lien placed on the home or structure. When the debtor has cash coming in, the local sheriff or marshal may be ordered to collect through these means. A forcible sale of equipment, tools and machinery is often possible as well.

The Lawyer’s Role

Once an award has been successfully judged in the case for the victim of an incident, the lawyer’s job is usually complete. However, if the business files for bankruptcy, it is the lawyer that often needs to continue looking for a means of payment and collecting the award. Through further assistance, this may be possible.


Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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