How Does Bankruptcy Affect a Personal Injury Settlement in Las Vegas?

Today’s blog talks about how bankruptcy can affect personal injury settlements. Recently, the Nevada Supreme Court had to decide whether a person could have more than one active personal injury claim while still in bankruptcy. See Kaplan v. Dutra, 132 Nev. Adv. Op. No. 80 (2016). The high court determined that the injury party, who was also in bankruptcy, was entitled to get benefits from more than one personal injury claim. 

In the Kaplan case, David Kaplan had two active personal injury claims. Kaplan was involved in a dog bite attack, where he injured his back. After the dog attack, Kaplan had back surgery. With a seemingly stream of bad luck, just six weeks later, Kaplan was rear-ended in a car accident. The car accident caused the need for Kaplan to undergo a second back surgery.

Kaplan filed personal injury claims for both injuries. Kaplan later filed for bankruptcy. His two personal injury cases settled and he was set to receive his share of the settlement funds from both cases. Nevada law allows for injured debtors to take $16,150 of their personal injury settlement for themselves.  See NRS 21.090(1)(u), Kaplan asked the Court to allow him his two $16,150 exemptions. 

The person in charge of overseeing Kaplan’s bankruptcy, the Trustee, thought that Kaplan should only get one $16,150 exemption. In reviewing both parties’ arguments, the Nevada Supreme Court sided with Kaplan. The high court determined that Kaplan would be allowed to recover on both his dog attack and car accident case. 

“We conclude that under NRS 21.090(1)(u), a debtor is entitled to multiple personal injury exemptions of $16,150 on a per-claim basis.” Specifically, NRS 21.090(1)(u) provides an exemption for [p]ayments, in an amount not to exceed $16,150, received as compensation for personal injury, not including compensation for pain and suffering or actual pecuniary loss, by the judgment debtor. . .
 
The Nevada Court has previously noted that "[w]e liberally and beneficially construe our state exemption statutes in favor of the debtor." In re Christensen, 122 Nev. 1309, 1314, 149 P.3d 40, 43 (2006). "The purpose of Nevada's exemption statutes is to secure to the debtor the necessary means of gaining a livelihood, while doing as little injury as possible to the creditor." Savage, 123 Nev. at 90, 157 P.3d at 700 (internal quotation marks omitted).  So, if you are in involved in a personal injury case and have an active bankruptcy, you will be allowed a maximum of $16,150 for each personal injury case you have. 

Next time, we will talk about when you have to disclose future medical costs in personal injury trials.