Every attorney has seen or heard of this scenario. You represent a client and after years of litigation, the opposing party agrees to settle and pay your client over time. You have successfully succeeded for your client. Later, sometime before payment in full, the settling party files for bankruptcy seeking to discharge your client’s debt in full. You slowly realize that you may have to restart the litigation before the bankruptcy court. Adding insult to injury, your client may have to return settlement monies to the bankruptcy estate.
Here are a few ways to protect your client from this likely and unfortunate situation, particularly against the discharge of debts by individuals.