Bankruptcy & The FELA, Part II


Several months ago, I published an article regarding bankruptcy in the FELA - Federal Employers' Liability Act context.

Since that time, I have had a numerous calls from clients and other concerned railroaders asking for another article on the subject to review and to further explain some of the concepts in the original article.

Injuries have a devastating effect on lives. Not only does the individual railroader have to cope with the physical pain he suffers from, but his problems are often compounded by the inability to return to his old job due to the injuries. During what often is a lengthy rehabilitation process, the bills mount up, often helped along by the railroad, which somehow never seems to get medical bills promptly submitted to, and paid through, the insurance company. As bills begin to mount, collection agencies begin to call. When debts begin to substantially exceed a person’s assets, bankruptcy is often the only way out. In 2003, almost 1.7 million people filed for bankruptcy. This number represents a large increase in bankruptcy filings from the previous year.

Federal bankruptcy law governs how a bankruptcy is to be handled. Bankruptcy allows the debtor to seek some protection from creditors and discharge most of the debts owed to the creditors. There are several types of bankruptcies which are administered by the federal courts, but the most frequently used types for individuals would be Chapter 7 and Chapter 13 bankruptcies.

Shortly after a bankruptcy petition is filed, schedules of a debtor’s assets and liabilities must be filed with the court. This information is used to determine what the creditors can receive from a debtor’s assets to pay back at least part of the money that they are owed. A person called a bankruptcy trustee is assigned to oversee the administration of the bankruptcy estate. He or she utilizes the assets which are listed on the schedules to get the creditors as much as they can in order to pay some or all of the debt, which will then be discharged against the debtor.

Here is where many people run into trouble. We continue to see individuals who fail to realize that your FELA work injury claim -- ironically often the very thing that brought the railroader to the edge of bankruptcy -- is an asset of the bankruptcy estate. This means that if the railroader settles the case or the case is tried to verdict, those funds can be used by the bankruptcy trustee to repay creditors. When an injured railroader seeks bankruptcy protection, whether or not he has already engaged designated counsel to represent him in his case, it is critical that the railroader remember that his injury claim is part of the bankruptcy estate. The attorney representing the debtor in the bankruptcy may not specifically ask the client whether or not he has any pending personal injury claims. Often, that attorney may simply ask if the railroader has any lawsuits. The railroader may not have even engaged an attorney to represent him in his case at the time and answers "no."

All too often we have seen the tragic consequences of a failure to include the FELA claim in a bankruptcy estate on the schedule of assets. Under federal law, the trustee, not the injured railroader, "owns" your FELA work injury case.

In other words, the trustee stands in the injured railroader’s shoes and can make decisions about settling the case, how the case is handled, and even which attorneys will represent the prosecution of the case.

The sooner FELA Designated Legal Counsel can become involved, the better chance it is that designated counsel can work with you and the trustee to get a maximum recovery for your FELA case to help to pay off creditors and to disburse the remainder of the settlement funds to you and let you move on with your life. The later the claim comes to light, the more difficult it is to properly integrate the claim into the bankruptcy estate. We have even encountered cases where the bankruptcy estate has been closed and the trustee has had to reopen the bankruptcy estate to settle the case for an amount the trustee thinks is in the best interest of the bankruptcy estate, against the wishes of the injured railroader.

The above facts demonstrate clearly that it is in your own best interest to consult with your designated legal counsel at the point where you begin to contemplate bankruptcy. Hoey & Farina can help you so that the claim does not get omitted from the list of assets, and we can begin to work with bankruptcy trustees and attorneys to handle your injury case in a way that helps you get the maximum recovery you are allowed under the law.

Should you have any questions relative to bankruptcy and an FELA work injury claim, please call Hoey & Farina at 1-888-425-1212.

If you or a loved one have suffered a work injury or wrongful death on the railroad, call an experienced FELA lawyer / railroad injury attorney at Hoey & Farina, P.C. at 1-888-425-1212, or complete this form, for your FREE CONSULTATION. Hoey & Farina represents clients throughout the United States.


542 South Dearborn Street
Suite 200
Chicago, Illinois 60605
Main: (312) 939-1212
Toll Free: (888) 425-1212
Fax: (312) 939-7842
Representing clients throughout the United States.


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