Work Comp and Bankruptcy

[mountanddo]

How does a pending work comp claim factor in a bankruptcy? If someone has a pending work comp claim are these funds considered exempt in a bankruptcy? This person was offered 10k and current medical bills to settle today. They declined as they have permanent damage from this injury and are going to be going to court for a much higher settlement which possibly could be between 50-100k which would be for lifetime medical bills, etc. They have been unemployed since June and it has taken this long to even get to the offer of 10k and medical bills. They haven't paid their mortgage or HELOC since June and the sheriff sale was rescheduled to January. His work comp court date will also be in January.

They are afraid that if they don't file bankruptcy and get discharged before the work comp claim is settled that the bankruptcy court could take the settlement. I'm thinking that when you file BK they ask if you have any pending lawsuits and it would be considered income even if they receive it after the discharge.

Any ideas?

[shark66]

My question...or two:

a) Are they filing in order to stop the Sheriff's sale, or there are other reasons as well?

b) Are they looking into Ch. 7 or Ch. 13?

Good luck to us all.

[mountanddo]

A. No, he wants out of the house but is hanging on because he is unemployed and has no money to pay for rent. Since the sheriff sale was delayed until January it gives him until approx July for the redemption period before he needs to move. Once the house is foreclosed his HELOC of 40k will become unsecured debt which is the reason why he will have to file.

B. Chapter 7

Edit: I know that people want to talk to the actual person that is going through this but he doesn't have internet access and I said I would try to find out some answers for him.

[shark66]

Your friend needs to talk to an attorney, or two or seven...yesterday.

If I'm reading your post correctly, he'll know where he stands with comp case in January. My advice would be along the lines of not filing prior to that.

Once he finds out how much he's getting - as well as when - he can start paving the road for getting these funds exempt ot otherwise untouchable...

My $0.02 only....

Good luck to us all.