Legal Settlements and Bankruptcy

If you are struggling with heavy debt, bankruptcy offers a well-trodden, safe road to debt relief. Bankruptcy does require repaying some of your debts, but much of your money and property is exempt from creditors. If you have recently won a substantial legal settlement, you may be concerned about the fate of your winnings during bankruptcy.

The good news is that the funds from your settlement may be at least partially exempt from bankruptcy. Exactly how much depends heavily on the circumstances and the type of case you won. For example, winnings from personal injury cases are less likely to be exempt than the recovery of back child support. Although personal injury winnings are intended to return you to normal after a serious injury, the question of whether or not your winnings count as income is less clear-cut than with child support.

Your unique circumstances can also affect the tax status of your settlement. If you are from a high-income household, the likelihood that your winnings are tax-exempt may be less than for low-income households. If you have spent any of the settlement money, tax officials may want to know where every bit of it went before they will grant you any exemptions. If you spent it frivolously, for example, the remainder might be taxed or used to repay your debts.

Contact Us

If you are one of the millions of Americans struggling with heavy debt, filing for bankruptcy may be the easiest and safest way to pay off your debt without creditors taking the shirt off your back. With the help of a Boston bankruptcy lawyer, you can keep the creditors at bay and restore your financial health. To discuss your case with an experienced Boston bankruptcy lawyer, contact the law office of Joshua Spirn & Associates today at 800-975-5346.