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In Illinois is my workers comp settlement free from chapter 13 bankruptcy?

Neoga, IL |

in 2011 i was injured at work requiring back surgery.i had the surgery, went back to work.i lost vision and now am on soc sec disability. we fell behind on our mortgage and my wife and i had to file chapter 13 bankruptcy in DEC 2013, our bankruptcy lawyer told us from day 1 my work comp settlement was 100% free from the bankruptcy. last week i got the letter from my work comp lawyer saying i would have my settlement check by the end of this month 6/2014, we took it to my bankruptcy lawyer, he called yesterday and we had to meet with him today. today he said the bankruptcy trustee is taking $8,800 of my settlement and we can keep the rest. i asked how he could, he said chapt 13 he can take it all, chapt 7 he cant. ???

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Attorney answers 4


Proceeds from personal injury and workers' compensation cases are not exempt from bankruptcy, as they are generally considered assets of the bankrupt estate.

There are distinctions between Chapter 13 and 7, but your lawyer can explain those to you. For the most part, the case would have had to have been listed on the petition and considered by the trustee.

You will likely have to pay something of the proceeds to the trustee if you want the bankruptcy to go forward, but talk to your lawyer handling the bankruptcy.

This answer posted on Avvo is for informational and educational purposes only. There is no attorney-client relationship created or formed and you should not rely on this as legal advice. The suggestion is made that if you wish to protect your rights, you consult with an attorney immediately.



Thanks a bunch!the whole $8800 is going to the house mortgage so it is ok. Just wish the lawyer my wife and I hired had told me right, so I want broadsided. Thanks again so much!

Stephen Laurence Hoffman

Stephen Laurence Hoffman


Glad you're going to be okay.


This is more a bankruptcy question,but my college has correctly answered your question.

No attorney client relationship has been formed until you sign a representation agreement.



Thanks! I guess I am thankful he only took a 1/4, and it goes to the house. I was just confused by what I had been told at the start. Thanks again!


What does 820 ILCS 305/21 mean , "No payment, claim, award or decision under this Act shall be assignable or subject to any lien, attachment or garnishment, or be held liable in any way for any lien, debt, penalty or damages,"

There may be an issue with a claim creating excess disposable income in a Chapter 13 plan, but the plain reading of the statute exempts the claim itself.


Perhaps try asking this question again under the Bankruptcy law heading and you will get more bankruptcy lawyers answering your question.

I do believe my colleagues have answered appropriately, but as WC attorneys, we do not know all of the ins and outs of the bankruptcy laws.

Good luck,

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