Injury settlement exempt?

[Joe Franco]

I have decided to file for chapter 7 bankruptcy but I have run into a problem. I injured my back at work two months ago. It is possible I may not recover completly or my companys workman's comp carrier may not want me returning because im a high risk. I live in California and have about 40k in unsecured debt I would like to discharge. I was told by an attorny this would have to be included in the estate since it happened prior to the bankruptcy, but he would be able to file any payments I may be intitled to as expemt in the bankruptcy so they couldnt take this money later. I did some research of my own and found that California has two sets of exemptions you can file under. You can choose either one but not both. You can choose to use either the regular exemptions or the special exemptions. Under the regular exemption section 704.140(a) "Personal injury cause of action" is exempt as well as 704.140 "Loss of future earnings." Under section 704.140(d) it reads, "Personal injury payments after judgments or settlements" may be exempt if reasonable and necessary. I understand all of this to mean as long as I have not received payments or a judgment from this settlement it is all exempt. The bulk of a settlement if it would come to that point would be: future earnings, pain and suffering, and future medical. I talked to two other lawyers not initially supplying them with the info from the first attorny or anything I researched online reguarding the exemptions. This attorny told me it must be apart of your estate. After I supplied him with the information I found online he was not to sure of himself. He checked it in one of his law books and still wasnt sure. The next attorny was an almost identical situation. I left with him telling me, "Thats a really good question but I do not have an answer." My guess is these two attornys do not have much experience involved with injury settlements involved in a bankruptcy? I have 3 more consultations with week, hopefully I can get some answers. Does anyone have any information on this issue? Any information would greatly be appreciated. Thanks!

[lrprn]

Since the injury and request for settlement happened before you file, you will need to disclose the potential settlement to your trustee and include it your forms. However, from what you posted, it sounds like at least one of the CA exemption plans exempts a settlement like yours. Do you know if there's a cap on how much can be protected? How much will the settlement be for?

[CindyLou]

did you already get the settlement or has the judgement been filed and you haven't gotten it yet?

[Joe Franco]

As of right now there has been no request on my part or no offer on their end. It is possible I may get better. Just a waiting game for the time being. I would be just guessing if I had to put a price on it. Under Californias first plan which is called "regular exemptions'' it says a settlement for loss of ALL future earnings are exempt as well as personal injury cause of action. If there was a judgement or settlement before you file the bankruptcy then it is whatever is "reasonable and necessary." Under Californias second plan which they title "Special Exemptions" you can not file exempt for loss of future earnings. Under the second plan there is an exemption for personal injury after a judgement or settlement that will let you keep up to $18,675.