Re: Is WC Lump Sum Award Exempt in Pa Chapter7 Bankruptcy
Yes. In P.A you can choose which is the most beneficial between federal or state exemptions - in your case both allow for worker compensation benefits to be exempt.
In Pa, is any or all of this money exempt from bankruptcy?
Not only is the settlement exempt, any property that is traceable to payment of comp benefits are also exempt.
What Property is Exempt from Liquidation in a Chapter 7 Bankruptcy in Pennsylvania?
Pennsylvanians considering filing for Chapter 7 bankruptcy are able to choose whether they want to use the exemption statutes that have been established by the federal government or those that have been established by the state. In most cases, the federal exemptions end up being more beneficial than the state laws. There are also some federal exemptions that can be used in addition to those established by the state.
The state of Pennsylvania permits you to exempt workers’ compensation benefits, disability insurance payments, pension accounts and retirement accounts.
Federal Bankruptcy Exemptions
Choosing Between State and Federal Exemptions
To determine which set of exemptions is best for you -- state or federal -- make list of your property and it's value. Then compare what property you can keep under each system. (To learn more about bankruptcy exemptions and how they work, see Bankrutpcy Exemptions -- What Do I Keep When I File for Bankruptcy?)
Lump Sum Workers’ Compensation Settlement Exempt under 522(d)(11)
Posted by NCBRC - February 11, 2015
Contrary to majority opinion, proceeds of a lump sum workers’ compensation settlement were found to be exemptible under section 522(d)(11)(E), to the extent necessary for support of the debtor and his dependents. In addition, a Medicare “set aside” is not property of the estate. Carr v. Arellano (In re Arellano), No. 14-990 (Bankr. M.D. Pa. Jan. 5, 2015).
Section 522(d)(11)(E) permits a debtor to exempt “property that is traceable to . . . a payment in compensation of loss of future earnings of the debtor . . . , to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.”
Consult and retain a bankruptcy lawyer to protect your rights and make the best decisions based on the facts of your case.
Moderator Responses are based on my personal bias, experience and research - They do not represent the views of the admin nor may be accepted in the legal community, always consult an attorney.