Bankruptcy and The FELA

Richard A. Haydu, Attorney ** PROVIDING RESULTS YOU NEED AND DESERVE! **

Picture this hypothetical situation. You have been suffered a work injury on the railroad and have been unable to return to your old job. If you do not have any insurance benefits or other sources of income, you may be in serious financial trouble.

As time goes by, the medical bills and other bills begin to mount. You fall behind on your mortgage, your car payments and other obligations. Perhaps the railroad even plays games with your medical bills and delays submitting them to the insurance company for payment. Creditors begin calling you to demand payment and make threats. The railroad refuses to negotiate your case in good faith, knowing that you are in dire financial straits and hoping you will be forced to settle your claim for less than it is worth - out of desperation and financial necessity. One of your last options is to consider filing for bankruptcy.

Does this sound like a horrible situation? Unfortunately, this is an all too real scenario which plays out far too many times for injured railroaders across this nation. How you handle your bankruptcy filing may have a significant impact on your recovery under your FELA - Federal Employers’ Liability Act claim.

The federal bankruptcy law, 11 U.S.C. §101-1330, governs how a bankruptcy is to be handled. In general, bankruptcy allows you to seek some protection from your creditors and discharge most of your debts when you owe more money than you can pay back.

Within 15 days of filing a bankruptcy petition, schedules of a debtor’s assets and liabilities must be filed with the court. This information submitted to the court is the means by which it is determined how much the creditors can receive from your assets to pay back at least part of the money you owe them. A person called a trustee is assigned to the case. He or she oversees the administration of the bankruptcy estate. The trustee’s job is to utilize the assets which are listed on the schedules to get the creditors as much as they can in partial payment of the debt which will then discharged against you.

The FELA claim is an asset of the bankruptcy estate and any money that is received from the railroad by verdict or settlement can be used by the bankruptcy trustee to satisfy your creditors. Unfortunately, when sitting down with the attorney representing you in the bankruptcy matter and setting out the schedules of what you own and owe, railroaders have sometimes failed to include their FELA claim as an asset. This occurs for several reasons.


  • The bankruptcy attorney may not specifically ask the client whether or not he or she has any pending personal injury claims.
  • The bankruptcy attorney may simply ask if the railroader has any lawsuits and, at that time, a suit may not yet be filed.
  • Since he has not yet received any money for it, the railroader may not realize that his FELA claim is an asset.
  • Being concerned of the bankruptcy proceedings, the railroader may simply have overlooked putting the claim on the schedule of assets.
  • Finally, the railroader may not yet have sought out help from designated legal counsel who would have informed him that the potential FELA claim must be considered as an asset.

What are the consequences of failing to include in a FELA claim in a bankruptcy estate on the schedule of assets? The answer depends upon when the mistake or oversight is discovered. The earlier the mistake is discovered, the better.

If it is discovered before the bankruptcy is finalized, the schedules can be amended and the claim, when settled, will be included in the estate. If the bankruptcy has been finished and the debtors discharged when the mistake regarding the pending FELA claim comes to light, the case will be reopened by the trustee.

Under the law, the trustee actually “takes over” your case from you. In effect, the trustee stands in your shoes. The result is that the trustee has the power to settle the case for an amount the trustee feels is in the best interests of the bankruptcy estate. In a worst case scenario, after the creditors have been paid no funds will remain for you and your family from your own injury claim.

It is in your own best interest to notify your designated legal counsel representing you in your FELA claim that you are contemplating bankruptcy. Your attorney can help you so that the claim does not get omitted from any list of assets. Your designated counsel will work with bankruptcy trustees and bankruptcy attorneys to handle your injury case in a way that helps you get the maximum recovery you are entitled to under the law.

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.

HOEY & FARINA, P.C.

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

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