Are Workers’ Compensation Benefits Protected in Bankruptcy?

Oct 10, 2011 No Comments by

 

In many cases when a client walks in our office to seek bankruptcy advice it is because they are at the end of their rope and under severe financial distress.  Often times, many clients have already lost or are at risk of losing nearly everything they have.

When someone has been injured at work they are no longer able to receive their full compensation if they are unable to work due to their injury. Instead, they get workers’ compensation benefits which are typically 66.6% of their regular income. Workers? compensation benefits may be the only asset or source of income a person has. In these situations, one of the first questions a client will ask is whether or not their workers compensation benefits will be protected, and will they be able to continue to receive the benefits if they file bankruptcy.  Well, in most cases the answer is ?yes?.

Workers compensation benefits may include payments you receive from your employer after being injured in an accident at work. These benefits/payments are usually based upon a percentage of your wages and are considered income and will not be affected by filing bankruptcy.

Under North Carolina law, workers? compensation benefits are exempt. When you file a bankruptcy, the bankruptcy Trustee does not have the legal right to seize any benefits that you are receiving at the time.  Although the Trustee cannot take your benefits, your benefits are considered income and will be used for the Means Test to determine whether or not you can qualify for a Chapter 7 bankruptcy and/or the amount that you will need to pay back to the court in the event that you file a Chapter 13 bankruptcy.

If you are expecting a large workers compensation settlement, it is very important that you discuss the pending settlement with your attorney ahead of time. Once a settlement is reached, it is necessary in some districts of North Carolina that you obtain the Court’?s approval to settle the claim and the exemptions in your bankruptcy are amended.

Bankruptcy, Bankruptcy Video Vault, Chapter 13, Chapter 7, Duncan Law Blog, Video, Workers Compensation Video, Workers' Compensation, Workers' Compensation
Written By:

About the author

At Duncan Law, LLP our goal is pretty simple. We try to make people's lives better. And in doing so we try to treat people the way we would want to be treated. It's just that simple.

We practice primarily in the areas of bankruptcy and workers' compensation. We have offices in Charlotte, Greensboro and Winston-Salem, NC.

Damon's Google Profile

No Responses to “Are Workers’ Compensation Benefits Protected in Bankruptcy?”

Leave a Reply