How to Avoid Bankruptcy After a Workplace Injury

A workplace injury can result in time away from work and significant medical expenses that can cause victims and their families to endure fi...

A workplace injury can result in time away from work and significant medical expenses that can cause victims and their families to endure financial difficulties while they wait for their workers’ compensation benefits to pay out. Although workers’ compensation benefits will cover an injured worker’s medical bills and replace a portion of the employee’s income, obtaining these benefits can take time—especially if the initial claim is denied. This may lead some injured workers to consider filing for bankruptcy.

During these stressful times, reaching out to a work injury attorney harrisonburg or another local area can be crucial. An attorney can guide you through the workers’ compensation process, especially if your claim has been denied or delayed, ensuring that you are taking the necessary steps to secure your benefits.

Things to Consider When Filing Bankruptcy with an Open Workers’ Compensation Case

There are important factors to consider when filing bankruptcy while waiting on workers’ compensation benefits to go through. To begin with, a person’s property becomes part of the bankruptcy estate when the case is filed. In addition to financial assets, physical property, and debts owed to the filer, that also includes claims the injured worker has against workers’ compensation insurance and any other third parties.

The bankruptcy court is in control of all property in a bankruptcy estate until the bankruptcy case is dismissed or discharged. While a chapter 7 bankruptcy is typically discharged within just a few months, a chapter 13 generally is not discharged for 3 to 5 years. Since the bankruptcy court needs to be aware of all of the filer’s property, failing to notify the court about a workers’ compensation claim can result in negative consequences. In some cases, the injured worker may even lose the right to pursue his or her work injury claim.


Because there are so many intricacies involved when a person files bankruptcy with an open workers’ compensation claim, it’s best to make every attempt to avoid filing bankruptcy until after all injury cases are settled. Fortunately, injured workers who are struggling financially have a variety of options to help them get through difficult times.

Paying for Medical Expenses While Waiting for Workers’ Comp

Medical providers cannot legally send medical bills to collections while a workers’ compensation case is pending. A growing stack of medical bills can still be quite intimidating, however, and the added stress can interfere with a person’s recovery. In some cases, doctors and hospitals will be willing to work out a repayment plan if the injured worker explains that a workers’ comp case is pending. If immediate repayment is necessary, workers may be able to borrow money from friends, family members, or a charitable organization like the United Way. If consumer loans are to be considered, workers should be sure to read the fine print, and fees could swallow up the workers’ compensation settlement when the money finally comes in. If the workers’ compensation claim is denied, private health insurance may be an option.

Filing a Third-Party Injury Claim While Waiting for Workers’ Compensation Benefits

Although workers’ compensation is generally the exclusive remedy for workers to obtain work injury benefits, exceptions may apply. If a defective machine or piece of equipment caused the injury, the worker may be able to file a third-party injury claim against the product manufacturer in addition to filing a workers’ compensation claim. In some cases, a third-party injury claim may be settled more quickly than a workers’ compensation claim, putting much-needed funds in the injured worker’s pocket while the work injury case is pending.

Pre-Settlement Funding to Cope with Financial Difficulties

Injured workers who are struggling financially may also wish to consider pre-settlement funding to help them make ends meet while their workers’ compensation case is pending. By taking out a workers’ compensation loan, the injured employee would be borrowing against his or her settlement. Since the cash advance is based on the merits of the case, in many cases, no credit check is required for pre-settlement funding. Since pre-settlement cash advances are not loans, workers usually don’t have to pay the money back if their case is denied.