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Can I File for Bankruptcy and Keep My Personal Injury Award?


Yes. When you file for bankruptcy you can claim certain things (i.e. awards from personal injury suits) as "exempt" and thereby keep them. California gives debtors a choice between the state law exemptions found in California Code of Civil Procedure section 703 and the exemptions in section 704.

Section 703 provides that up to $22,075.00 of a personal injury award is exempt, and this amount does not include money awarded for pain and suffering or compensation for actual money lost.

Section 704(b) provides an award of damages or a settlement arising out of personal injury is exempt to the extent necessary for the support of you, your spouse, and your dependents. However, section 704 states that periodic personal injury payments may be garnished to pay off other money judgments an individual may have, meaning that however much can be garnished from your wages can be garnished from the periodic payments you are receiving from your personal injury suit. Because of this, the section 703 exemption is often times a better choice for debtors.

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