An area of the law commonly misunderstood is that of bankruptcy, and its consequences for an injured car accident victim. Recently the Ontario Superior Court in Conforti and Morasch v. Gauvreau provided clarity on a number of issues arising from the bankruptcy of a Plaintiff in a personal injury court case.
A Plaintiff who becomes bankrupt during the course of their personal injury lawsuit does not need to obtain an Order to Continue the case. Their action is not Stayed. The Plaintiff’s case continues in the normal course, even after becoming “bankrupt.” The Plaintiff retains an interest in most of the damages typically claimed for in a personal injury case; this includes damages for income loss and loss of competitive advantage. The Creditors of the Bankrupt do, however, have legal rights to certain damages recovered by the Plaintiff, but their rights are to be exercised outside the Plaintiff’s personal injury case.
It is critical that the lawyer for the bankrupt Plaintiff work closely with the Trustee in Bankruptcy, to ensure that the rights of all affected parties are properly handled, as a result of the Bankruptcy. Further, properly handling all issues stemming from a Plaintiff’s bankruptcy at the conclusion of the personal injury lawsuit will best enable the bankrupt Plaintiff to move forward from both the bankruptcy and their personal injury case.
Kaitlyn MacDonell recently presented at the Ontario Trial Lawyers Association regarding the effect of Bankruptcy on a personal injury court case. For further information on this issue please contact either Kaitlyn at 647-260-4498.