What Happens When A Car Accident Defendant Goes Bankrupt?

I was thinking about this topic because Monday morning I found myself in a very unusual place for a personal injury lawyer- United States Bankruptcy Court. How did I end up there?

I have an auto accident injury case pending in the Circuit Court for Charles County. I represent a plaintiff who was injured when another driver rear-ended her. During the course of litigation, it came out that the defendant had a pending bankruptcy claim.

Defense counsel filed a Suggestion of Bankruptcy in the state court case. Pursuant to federal law, that case was stayed until resolution of the bankruptcy. This would be a bad thing because it would mean that my injured plaintiff would wait more or less indefinitely to get her case moving.

There’s a way around this problem. Upon proper motion, the bankruptcy court may lift the stay, where the loss is covered by insurance, up to the limit of the policy. This is because, under those circumstances, the claim has no potential impact on the bankrupt estate. Once the bankruptcy court enters an order lifting the stay, the thing to do is file a motion in the state court asking that the action no longer be stayed, and that if needed, the court amends the scheduling order to account of all the time that went by because of the bankruptcy stay. Hopefully that will get my case moving again.

The experience got me thinking about appearing in unfamiliar courts in general. I’m no bankruptcy lawyer. Over my career, I’ve set foot in a bankruptcy court precisely one other time. So what I did Monday is what I do every time I have to appear in a court I don’t know very well.

First, I got there early. This lets me get the lay of the land and allows for a trip to the clerk’s office if I need help figuring out what room the hearing is in (which in this case, I did). Second, I get into the courtroom as early as possible and check in with the clerk. I do this for two reasons. It lets me tell the clerk that I am here and inform them as to the nature of my appearance before the court. This matters, because in terms of docket efficiency, the court will often take uncontested or preliminary matters at the beginning of the docket. Most importantly, this is my chance to ask the clerk how the court is run. What does this judge need? Where am I to stand? Are there any procedures particular to this court?

Court clerks always seem happy to help polite and respectful attorneys with this sort of “scouting report”. It really does help, as I could get my matter called second on the docket, I knew the court’s preferred procedure, and I found out that in the future, if the motion was uncontested, I could call ahead and the matter would be handled with no need for me to appear. It ended up being a very useful five minutes talking with the clerk. I recommend doing this any time you have to appear in a court you don’t know very well.