Bankruptcy is designed to help give Americans struggling with financial problems a fresh start. But if one of your financial struggles is (or could be) damages from a personal injury lawsuit judgment, can bankruptcy help? The answer depends on a few factors. Here's what you need to know.

1. Many Judgments Can Be Discharged

The good news for defendants who are ordered to pay damages is that those damages are often dischargeable in the right bankruptcy case. In general, compensatory damages are treated as qualified unsecured debts, which have the greatest likelihood of being discharged with Chapter 7 bankruptcy. However, punitive damages may or may not be discharged.

2. Two Important Exceptions Exist

While most damages can be part of your bankruptcy case, not all qualify. There are two important exceptions. The first is if you were found to be intoxicated at the time of the accident. The second is when you are deemed to have acted intentionally and maliciously. In both cases, the court can allow collections to continue. 

3. You Have to Convince the Trustee

The outcome of your personal injury trial or settlement is the biggest determining factor for these exceptions to discharge. However, it's not necessarily a slam dunk. Bankruptcy courts have their own standards to determine what is malicious and what isn't, for example. So you may still be able to convince the trustee that your case doesn't meet these standards. 

4. The Automatic Stay May Protect You

When you file for bankruptcy, the most immediate relief is the automatic stay. This stay halts all collections efforts temporarily, including judgment enforcement. The stay buys you time to prepare your case for the trustee. And the creditor generally has to request the stay be lifted, which doesn't always happen either. 

5. You Can Still Get Relief

Even if your personal injury judgment cannot be discharged, bankruptcy can still help. If you can clear away many or all of your other debts and obligations through Chapter 7, you may find that the judgment is more manageable to pay. The level of relief available to you depends on your overall financial picture. But you shouldn't rule out bankruptcy before thorough investigation. 

Where to Learn More

Bankruptcy and civil law are two difficult subjects — especially when combined. The best place to learn about your rights, options, and responsibilities is to meet with a bankruptcy attorney in your state right away. With their expert help, you'll find the best route to financial stability.