Understanding Bankruptcy and Car Accident Lawsuits

This podcast discusses filing for bankruptcy when a car accident is involved. With a car accident, when there is insufficient insurance to cover the damages or bodily injury claims, a lawsuit is likely, which could lead to further issues such as bankruptcy and/or the hiring of a car accident lawyer. I summarize these issues in this blog post transcript.

Listen to this podcast.

Hey there. Thank you for listening in. You are in the right spot if you’re here to learn about bankruptcy, especially if you are considering filing for bankruptcy because of a car accident. So, as you can see, I have my PowerPoint ready for those following me on YouTube. I’m ready to teach class.

By the way, there is a pop quiz at the end, and if you get it wrong, you have to send me a check 😉.

Car Accidents and Bankruptcy

Unfortunately, car accidents happen. If you’re at fault, the question is, what are your options? Suppose you have a $20,000 car insurance policy, and the car accident resulted in $10,000 in damages to the other driver. Then you’re good. There’s more than enough coverage with your auto insurance policy.  But what if there’s not? Let’s change the numbers.

Suppose the car accident lawsuit was for $100,000. Now, there’s an $80,000 difference. If you can afford it, great. Cut a check, and you’re done, or a payment plan can be arranged with the car accident lawyer. But if you can’t afford to pay the judgment, now there’s a problem. A problem on top of a problem.

At some point, your driver’s license will be suspended if the judgment isn’t paid. If you are caught driving with a suspended license, depending on where you live, you might go to jail since it’s a criminal offense. Now, more money is spent to hire a criminal traffic attorney. Plus, there will be court fines and penalties, and while it’s likely a small amount, you still have to bond out of jail. Things went from bad to worse quickly. However, filing for bankruptcy could be the answer.

Over and over again, I’ve heard people say you can’t file for bankruptcy to wipe out a lawsuit or judgment. That’s not true. Sometimes, clients say you can’t wipe out a judgment from a car accident. Also, that’s not true. Please, listen to me, not your cousin who graduated from Google Law class of 2024.

The fact is that a car accident is nothing more than a simple negligence case. Lawsuits and judgments related to negligence cases can be wiped out with bankruptcy. Where people get confused is when a DUI or DWI (Driving Under the Influence or Driving While Intoxicated) is involved.

While bankruptcy can still be filed because of a car accident, if there’s a DUI charge involved, the damages or lawsuit from that accident will not be wiped out in bankruptcy. But no law says you can’t file for bankruptcy to wipe out credit cards, personal loans, etc. Remember, not all debts can be discharged in bankruptcy.

So long as a DUI car accident is not involved, bankruptcy can be a solution. This would eliminate the judgment and the attorney’s fees of the car accident lawyer.

I know accidents will happen, but here’s my public service announcement. Please stop texting and driving. You can not only kill yourself, but you can kill another person. Imagine having to go to prison for vehicular manslaughter because of texting and driving. It’s just not worth it. So please stay safe.

I hope this podcast helped you better understand filing for bankruptcy because of a car accident.

Click the links below to see other blog posts and categories.

• Bankruptcy
• Your Wallet

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.

Disclaimer:

This podcast was transcribed from an audio recording. The transcription may contain inaccuracies or errors due to the limitations of transcription software and the quality of the audio. I have made every effort to ensure the accuracy of the transcription, but cannot guarantee it.

The views and opinions expressed in this podcast are those of the host(s) and guest(s) and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. Any content provided by our host(s) and/or guest(s) is of their opinion and is not intended to malign any religion, ethnic group, club, organization, company, individual, or anyone or anything.

This podcast is for informational purposes only and should not be considered professional advice. Please consult with a qualified professional before making any decisions based on the content of this podcast.

Updated on March 20, 2025.