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Does Bankruptcy Protect Workers Compensation Benefits?

Posted By Allmand Law Firm, PLLC || 29-May-2013

Bankruptcy and Workers Compensation

Workers compensation benefits are funds made payable to an individual who was injured while on the job and unable to perform their duties due to the injury. The compensation may be considered a main source of income for the household. If bankruptcy is an option it is common to wonder if benefits can be protected from creditors, and will they continue receiving them during the course of the case. For the most part, filing for bankruptcy will not interfere with your ability to continue receiving benefits. In short, your benefits qualify for protection.

Workers compensation benefits are often calculated based on wages earned before the injury occurred. Yet, when you file bankruptcy you are required to report forms of income your household receives to determine eligibility. Most states allow workers compensation benefits to be exempt, meaning they qualify for protection under exemptions provided through bankruptcy.

If you are expecting to receive workers compensation benefits after you file bankruptcy, it is important to mention the possibility upon beginning the filing process. Meaning, if you have a settlement pending and decide to file for protection, discuss your situation with you attorney before your settlement becomes final. Failing to mention a potential settlement that has yet to occur prior to filing could jeopardize the outcome of your case.

You can file Chapter 7 or Chapter 13 bankruptcy. If you qualify for a repayment plan under Chapter 13 monthly payments are determined by household income and prior debts that are required to be repaid.

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