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Pain in the Hip for Debtor Turned Out to be a Pain in the Neck for Trustee

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April 10, 2018

Background:

  • October 2007 Debtor had right hip replaced; hip had no issues.
  • July 2009 Debtor and wife filed Chapter 7 and received a “no asset” discharge
  • November 2009 Debtor told his Doctor that he was experiencing pain in hip joint.
  • November 2010 Debtor told his Doctor that the pain was worse.
  • January 2011 Debtor had total right hip revision.
  • March 2012 Debtor retained attorney against manufacturer of hip
  • March 2017 Attorney informed Trustee that Debtor was involved in products liability claim and was offered $235,000 to settle.
  • Bankruptcy Court reopened the case to allow the Trustee to administer the recovery.
  • April 2017 Debtors amended their claim to list this hip claim as exempt.
  • Trustee objected and stated that the doctor’s notes indicated the pain was ongoing for the past six months.

Court Ruling:

  • Although the Debtor received the hip replacement before prior to filing bankruptcy, he did not experience problems and/or “medically objective proof” until after he and his wife filed for bankruptcy.
  • Debtors’ claims arose post-petition and was not sufficient to be included in the bankruptcy estate. Award from manufacturer was exempt from the Bankruptcy.
  • The settlement of $235,000 was not property of the Bankruptcy estate and was the property of the Debtors.

This case was a pain in the hip for the Debtor and turned out to be a pain in the neck for the Trustee.

Each case is different in a bankruptcy and good representation is required before debtors go to Bankruptcy Court.