Chapter 13, Disabled, Personal Injury Settlement

Asked 6 months ago - Houston, TX

Although I have a decent amount of a personal injury settlement "exempt" in Chapter 13 bankruptcy, I am told that exemption is useless and that in order to retrieve any portion of my injury settlement I have to have a written estimate from a licensed carpenter to present to the Trustee in order to have ADA safety and health issues done to my home and vehicle. Then, that has to be approved. I don't remember ever hearing about this prior to filing or anywhere that I've read about Chapter 13 bankruptcy.

Attorney answers (3)

  1. Derek R. Caldwell


    Contributor Level 18


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    Answered . If you have successfully exempted the proceeds of a personal injury settlement, I have no idea why you are being told that the exemption is useless. If you claimed the settlement proceeds as exempt and if the time for the Trustee to object to your claim of exemptions has passed (30 days from the first setting of your Section 341 Meeting of creditors) and the Trustee either did not object or the judge ruled in your favor, then the settlement money should be yours. Who is telling you that the "exemption" is useless? Now if you did properly claim the settlement/PI claim as exempt, then the trustee would have a claim on the whole settlement, but if you did properly claim the claim and the subsequent settlement as exempt, you need to speak with your attorney about this.

    DISCLAIMER: This message is intended as a general discussion of legal issues and not as a statement of fact, legal... more
  2. John Thomas Black


    Contributor Level 12


    Lawyer agrees

    Answered . Even though the settlement is exempt, at least one of our chapter 13 trustees in the Houston area takes the position that to the extent the additional income is not necessary to pay the debtor's reasonable and necessary expenses, it is additional disposable income and should be committed to the plan as an additional payment.

    If a debtor in such a position cannot show what the money will be used for, the trustee may file a motion to modify the plan under section 1329 of the Bankruptcy Code.

    We are a debt relief agency and we help people file for relief under the bankruptcy laws.
  3. Charles Ross Smith III

    Contributor Level 16

    Answered . While you are in a Chapter 13 plan, the use all of your assets are subject to the jurisdiction of the Court. This includes your "exempt" assets. The Trustee and the Court are concerned over how assets are expended while you paying only a percentage (usually) of your debts at 0% interest.

    Be sure that you understand who is asking for the estimates. Is it the Court (Judge) or is it the Trustee? Most of the time this would come from the Trustee. The Trustee does not speak for the Judge, but they are usually pretty familiar with what the Judge will require when a motion to expend funds is filed. Ultimately, the Judge must rule on this sort of motion. So, it's a lot easier and cheaper to simply get the Trustee to consent ahead of time.

    BTW, you are not getting special treatment. I hope that you have an attorney you trust to advise you in these matters. Good luck.

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