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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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My husband and I filed Chapter 13 last year. He will be receiving

Resolved Question:

My husband and I filed Chapter 13 last year. He will be receiving a lifetime annuity check from a workerscompensation settlement. Will this $249 lifetime montly check have to be included in the salary income to the bankruptcy court. No taxes are paid on this check. It is a compensation for a job related injury.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 7 years ago.
Hello,

Unfortunately you will need to notify the court of the workers comp annuity payment. Typically plan payments would be adjusted to reflect the increase in income resulting from the payment.
Customer: replied 7 years ago.
So you are saying this check received for compensation for a job related injury settlement is tax exempt, but does have to be reported to the bankruptcy court and the court will increase the salary income and take more from his paycheck because I am receiving this additional income.
Expert:  Ellen replied 7 years ago.
Hello,

Unfortunately that appears to be the result.
Customer: replied 7 years ago.

So you are saying that the check I receive for a compensation for a job related injury which is tax exempt has to be reported to the bankruptcy court, which will increase the salary income amount and therefore, increase the deduction taken out of my paycheck.

Also, does my inheritence received from my mother's death has to be reported also or is money not included in bankruptcy.

Expert:  Ellen replied 7 years ago.
Hello,


An inheritance during a bankruptcy or within six months of discharge would be considered part of the bankruptcy estate. An inheritance after 6 months of discharge would not be attached for the debts discharged in the bankruptcy.


What state is the plan filed in? I will check to see if there is a state exemption related to the WC that I am not aware of.


Customer: replied 7 years ago.
Please. We live in Austin, Texas. Check the inheritence part also. We filed in April 2006. His mom is 91 and he stands to get a good inheritence upon her death. We have lowered the debt somewhat for payroll deducting up until this time, but the debt owed is still about $50,000 I believe. Thanks for your help.
Expert:  Ellen replied 7 years ago.
Hello,

There is no exception for the inheritance.

Receipts of WC benefits are an exempt asset in a Chapter 7 bankruptcy but the benefits are incuded in the Chapter 13 payment plan.
Ellen and other Bankruptcy Law Specialists are ready to help you