Bankruptcy Court Addresses Impact of Bankruptcy Stay on Ability of Plaintiff To Proceed on Personal Injury Action

A recurring issue in civil litigation matters is the effect of a Bankruptcy Stay on the ability of a plaintiff to proceed on a personal injury action against a person in bankruptcy.

In the United States Bankruptcy Court for the Middle  District case of In Re: Betty L. Morris, No. 1-14-bk-03161 RNO (April 28, 2017), the court addressed a Claimant’s desire to move forward in a state court personal injury action to pursue only the extent of the available liability insurance coverage despite a bankruptcy stay.  

According to the Opinion, the Chapter 7 debtor received a bankruptcy in October of 2014.   The case was reopened in February of 2017 to consider a motion filed by a personal injury Claimant who commenced a pre-bankruptcy state court action against the debtor.   The state court action arose out of a motor vehicle accident against the debtor. 

The Claimant moved for a declaration from the bankruptcy court that her state court action, in which she wished to only pursue the extent of the available liability insurance coverage, is not stayed by the discharge injunction imposed by §524 of the bankruptcy code.

After a review of the matter before it, the court concluded that the state court personal injury action was not stayed and could proceed.  

Anyone wishing to review this case may click this LINK.

I send thanks to Attorney Scott E. Diamond of the Philadelphia, Pennsylvania law firm of Sacks Weston Diamond, LLC for bringing this case to my attention.