Tuesday, January 8, 2013

Ohio Wrongful Death Claims And Bankruptcy

What happens if you pursue or have filed an Ohio wrongful death lawsuit on behalf of a deceased loved one, but are considering or have to file for personal bankruptcy before the lawsuit is settled or before you win the wrongful death case?

Answer: it gets complicated. Example: wife dies due to an auto accident or medical malpractice. Husband files a wrongful death lawsuit on behalf of his deceased wife and any dependent children. If husband then files for personal bankruptcy, the husband's share of wrongful death claim and any potential recovery becomes an asset of the bankruptcy estate. Translation: if the husband makes a recovery of money through a wrongful death settlement or verdict, those proceeds can potentially be reached by his bankruptcy creditors. In fact, the bankruptcy trustee ( the person appointed to represent the interests of your creditors during your bankruptcy case) has the right to hire separate counsel to pursue the wrongful death claim on behalf of the bankruptcy estate.

Can the bankruptcy trustee take 100% of the husband's wrongful death proceeds in our example? This is where state law applies. Under Ohio law, there is an exemption  for:

"a payment on account of the wrongful death of an individual of whom the person was a dependent on the date of the individual's death, to the extent reasonably necessary for the support of the person and any of the person's dependents."

This means the husband and any other dependents (children) would be albe to retain some of the wrongful death proceeds for support of himself and any of the children. The amount of this figure would probably be within the bankruptcy judge's discretion.

As to any dependent children, they would have their own separate claim in the wrongful death lawsuit for the loss of love, companionship, and affection/guidance bacause of their mother's death, and in my opinion, any wrongful death proceeds they recover would not be subject to the reach of their father's creditors in bankruptcy court.

There's more to it than this but that's the down and dirty summary. Obviously, to navigate both the wrongful death claim and any potential bankruptcy require attorneys with knowledge of how all these laws intersect.

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