How Do Legal Settlements Affect Bankruptcy

Millions of Americans are faced with repaying extraordinary debts. As interest rates continuously add to the amount of money owed, many people opt to file for bankruptcy in order to resolve their debts. If you are one of the many who have recently begun bankruptcy proceedings, you may be wondering about the status of an upcoming or recently acquired legal settlement.

For more information about how bankruptcy can help you resolve and consolidate debts, contact the West Palm Beach bankruptcy attorneys at Eric N. Klein & Associates, P.A. by calling 561-353-2800 today to schedule a free initial consultation.

Legal Settlements and Bankruptcy

Depending on the circumstances surrounding your settlement, it may be fully, partially, or nonexempt from being used to repay debts. If your legal settlement is the result of a personal injury claim, it is more likely that it will be allocated to repaying your debts. However, if your settlement consists of missed child support payments, it will likely be exempt from bankruptcy, as it is considered to be a part of your income.

Because legal settlements are not easily categorized, you may be asked to provide receipts for where you spent your legal settlement. If it was spent frivolously, the remainder may be taxed or used to repay debts.

Contact Us

If you or someone you know is facing a mound of debt that seems irrevocable, you do have options. Contact the West Palm Beach bankruptcy lawyers of Eric N. Klein & Associates, P.A. to discuss your legal options by calling 561-353-2800 today.