October 18, 2019

How Does Chapter 13 Bankruptcy Affect my Workers’ Compensation Case?

I recently received a question from a gentleman named Charlie who asks:

I filed chapter 13 about 2 years ago, now I got hurt on Job and am receiving W.C.  In the process W.C. is to build a new house for me.  How does chapter 13 come to play?

My husband, Jonathan Ginsberg, has been a bankruptcy lawyer in Atlanta for over 20 years.  I asked him to respond to this question.  Here is his response:

Charlie, first of all, it is important that both your workers’ compensation lawyer and your bankruptcy lawyer know about your accident, the house construction benefit and possible settlement.  Assuming that your weekly wage benefit check is less than your regular salary, you need to make arrangements to keep your Chapter 13 plan current.  Given your injury, your bankruptcy lawyer may be able to amend your plan so that your payment is reduced to account for your reduced income.   Assuming that you foresee a settlement within the next three years, you may be able to make up the difference in a lump sum at settlement.

I have always taken the position that lump sum settlements in workers’ compensation cases may be treated as exempt property purusant to Georgia’s exemption statute.  You should speak to your bankruptcy lawyer about this.  This means that you may be able to keep some or all of your settlement even if your plan is paying only a small percentage back to your unsecured creditors.  In a similar vein, I would argue that the new house should be considered as exempt because it is necessary for your on-going support and maintenance.  Here, too, you need to seek counsel from both your bankruptcy lawyer and your workers’ compensation lawyer.

Finally, you need to advise your workers’ compensation lawyer to file an entry of appearance in bankruptcy court and to file a motion to approve both any settlement and any attorney’s fees claimed.  Bankruptcy judges usually do not have any problem with approving either a settlement or a fee contract, but if you don’t follow the required procedures, there could be delays.

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Jodi Ginsberg

Attorney Jodi Ginsberg represents employees who are injured on the job and who need medical care and missed wage benefits available under Georgia's workers' compensation laws.

Comments

  1. sylvia mckeown says

    my husband and I filed chpter 13 in 2003 , my husband receives monthly payments of 390 from workmanc comp settletment and lumop sums in 2007 and 2012 each of 20,000 we did not disclose this in out chapter 13 and now we are trying to sell this annunity ( a portion o=f thge monthly payments and the last lump sum) and we ran into a problem the company buying the annunity needs to know if the annunity was expemt from my chapter 13. I do not know this answer my chaptr 13 was discharged in June 2008 so i am not owing any more money to the trustee. can you tell if this was exempt?

  2. Sylvia, you are asking for legal advice and this blog is not the right forum for that. You need to speak to your husband’s Chapter 13 lawyer for advice about your particular case.

  3. file for bankruptcy says

    I recently had filed bankruptcy chapter 13 and had a 341 meeting few days ago…but I have a mortgage on my name, which is also on two other ppl, 3 owners. my attorney told me that mortgage will not be affected. The house is on the market, and we just got an offer few days ago, when we tried to do all the papers, countrywide refused to talk to other 2 owners, said that house is under bankruptcy!!! but it wasnt included…my case worker said that bank just need a some kind release form, and there will be a trial, but it will take 30-45 days and we might loose the offer. dont know what to do…

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