Let me recap your issues. . .
1. You filed bk in 1995 and it was dismissed in 2002 - totally irrelevant
2. You suffered a work related injury in 2006 - may have been exempt but you lost that argument by failing to disclose. . . read on
3. You filed Chapter 7 in 2008 and FAILED TO DISCLOSE the work related injury claim.
4. You got your discharge and the Chapter 7 was closed.
5. You decided to hire an attorney to pursue a law suit for the work related injury claim that you FAILED TO DISCLOSE in the 2008 bk.
6. The Defendant (or someone) informed the state court that you had a bk and had FAILED TO DISCLOSE that you had a work related injury claim and, as a result, the claim had not been abandoned by the closing of the case and you had no right to file the suit - you were not the "true party-in-interest".
Am I Warm???????
7. You then had to notify the bk court, reopen your case and the Trustee took over the suit that DID NOT BELONG TO YOU SINCE YOU FAILED TO DISCLOSE THE WORK RELATED INJURY CLAIM IN THE 2008 BK.
8. The Trustee, who was the "true party-in-interest" hired your attorney to continue the representation and the suit settled.
9. You are now being told you won’t get any money since the settlement $$ will be used to pay your creditors, the lawyer you hired, the lawyer that the Trustee hired, the Trustee's fees and who knows what else. You may even be asserting that the claim is exempt, but, since you failed to list in in the bk, the Trustee is correctly telling you that you are not entitled to any exemption.
10. You think you are getting the short end of the stick and are pulling out the "disability card"
11. You think the "punishment does not fit the crime".
Sorry bud, you should be happy with this outcome since you are not sitting in prison. It is a CRIME to fail to list an asset. If I were the Trustee I would have turned the matter over to the DOJ for a criminal referral as you committed bankruptcy fraud by failing to disclose the asset and, ever worse, attempting to capitalize on your fraud after your case was closed. Fortunately, the other side recognized the wrong you committed and spilled the beans.
My recommendation (having seen this type of activity many times over the past 24 years) is that you better walk away now while you are ahead. Spending 38 months in Club Fed ain’t no picnic especially if you are disabled.
Sorry to be so blunt, but I only call them like I see them. Maybe I am wrong, but I doubt it.
Des.