Settlments for injury expempted or not?

[vaslimkat27]

I will be filing chapter 7 bankruptcy in a few days but my three children and I were in a car accident in December 2008. We all have completed therapy and are awaiting settlements. The checks will be cut individually and my children all have their own savings accounts for college. I am on disability and have no other income. My children are 9,7 and 5 years old and I do not recieve child support for them. We live with my mother in Virginia and plan to do a homestead to exempt my excepted $3,000 federal tax return. Can I also exempt my $4,000 settlement? I plan to use the money to provide for my children and myself and hopeful have all the deposits needed to move into our own apartment. My children's share will go to their college savings. Am I even required to include my settlement? I don't expect to receive it before I file?

[JRScott]

If I read VA BK exemptions correctly the maximum you could exempt is 6500, 5000 + 500 per dependent.

Which means you could exempt the Tax return (3000) and exempt 3500 of the 4000. But yes as far as I can tell that is legal. You should ask a lawyer to be sure.

The one snag though is that if I read VA's exemptions correctly you have to be a householder to use the personal exemption amounts, which means you may need some of that 6500 to exempt other assets of yours. Thus you really need to ask a BK attorney in VA what options are best for you, even if that means delaying filing until some of these other events pass.

[vaslimkat27]

I think we will be okay. VA exemptions allowed for dependents without homeownership. I will ask an attorney to be sure and will post the response in this forum.