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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 12825
Experience:  B.A.; M.B.A.; J.D.
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settlement agreement over disputes

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I received a cash payout as a settlement agreement over disputes with my Federal employer. I was diagnosed with anxiety & depression due to job related stress and missed 8 months of work on sick leave. I also had an EEO complaint for discrimination that I rescinded in exchange for the cash payout and my voluntary resignation. My question is the cash settlement protected as an exemption under Chapter 7 bankruptcy? Federal and State taxes have not been paid. Can I leave the entire cash settlement in a separate non-comingled account and then sell non-exempt personal property to pay the end of year Federal and state taxes to protect the entire original cash settlement? In other words, do I have to pay the taxes on the cash settlement with a portion of the cash settlement? Thanks. Terry

Submitted: 11 months ago.
Category: Bankruptcy Law
Expert:  Phillips Esq. replied 11 months ago.
Thank you for giving me the opportunity to assist you. Kindly use CONTINUE or REPLY button to ask for clarification or follow-up questions.

Could you explain a little more?


Are you a civil service employee or just a government employee?


Did the settlement specifically state that it is for work related stress?


How much is the settlement?
Customer: replied 11 months ago.

Could you explain a little more? It is a complicated situation. I was dealing with job related stress in October - December 2012 because of derogatory notes from staff due to false rumors and allegations (adultery, racism, inappropriate contracts in the community, inappropriate relationships with staff that had been spread all over the medical center about me and job duties that were excessively stressful (EEO complaints, ULPs, grievances, etc.) . My healthcare provider diagnosed my with anxiety & depression related to work related stress. Therefore, I was out on sick leave the entire 3 month period.


 


I went back in January to clear my name and try to make the untenable situation work. I ran into more issues with staff because my name had not been cleared and I was being asked to terminate employees without merit from my supervisor. I felt it was immoral and unethical since I had discussed with my HR Manager and my Regional Counsel attorney who said the termination would not stick and I should doe what I believe it is right.


 


After two months of the same toxic work environment, I went back out in March 2013 under sick leave and have been out until I singed the settlement agreement and resigned August 9, 2013.


 


 


 


I was frustrated with my supervisor for lack of support and transparency on dealing with some tough healthcare operational issues. I asked my supervisor for help with the toxic environment. He did nothing to assist but blame me for the situation. He launched multiple fact findings, administrative investigations in an attempt to get me fired. In the end, I was cleared of all allegations and received an "Excellent" performance rating. Despite the investigation that was completed over 6 months ago, he refuses to give me a copy of the investigation clearing my name. When I resigned, I submitted a FOIA request to get a copy. In the end, I was out of sick leave and did not want to return to the same toxic environment so I signed a voluntary resignation in exchange for a positive job reference and $85,000. but waived all rights for worker's compensation, EEO discrimination complaint etc. Let me know if I can explain more. I have to be certain my cash settlement is protected or I will use the money in other protected ways such as repaying two 401(K) that I will be penalize 10% for early withdrawal and taxes that I don't have funds to pay except the cash settlement.



Are you a civil service employee or just a government employee?


I was the Medical Center Director for a VA Medical Center. I believe I was a civil service employee. Correct?



Did the settlement specifically state that it is for work related stress?


It does not specifically state what the settlement offer is for except to eliminate any threat of future claims and gives a variety of examples such as worker's comp. and EEO discrimination, etc.



How much is the settlement?


I have attached the actual settlement agreement which was $85,000.


Attachment: 2013-08-18_151647_settlement_agreement_2.pdf

Let me know if the actual file uploaded.

Expert:  Phillips Esq. replied 11 months ago.

Thank you for the detailed information Terry.


Your Questions:
I received a cash payout as a settlement agreement over disputes with my Federal employer. I was diagnosed with anxiety & depression due to job related stress and missed 8 months of work on sick leave. I also had an EEO complaint for discrimination that I rescinded in exchange for the cash payout and my voluntary resignation. My question is the cash settlement protected as an exemption under Chapter 7 bankruptcy?



Response 1: No, it s not.


Federal and State taxes have not been paid. Can I leave the entire cash settlement in a separate non-comingled account and then sell non-exempt personal property to pay the end of year Federal and state taxes to protect the entire original cash settlement?


Response 2: No, because this settlement money is not protected, it is not an exempt asset. So, you should take necessary steps to spend down the money and then file for bankruptcy protection after a year of spending down the money to ensure that your payments would not fall under any preference claim of the bankruptcy trustee. See 11 U.S.C. Section 547.


In other words, do I have to pay the taxes on the cash settlement with a portion of the cash settlement? Thanks. Terry



Response 3: Yes, because the settlement money is not an exempt asset.

Customer: replied 11 months ago.


Darn. that's disappointing. Can I transfer most of my personal property to my parents now, wait a year while living on the $85,000 and then file bankruptcy?

Expert:  Phillips Esq. replied 11 months ago.

Darn. that's disappointing. Can I transfer most of my personal property to my parents now, wait a year while living on the $85,000 and then file bankruptcy?


Response: If you transfer assets to your parents, you need to wait for two years before filing for bankruptcy protection to avoid any issues with the bankruptcy trustee. See Statement of Financial Affairs, Item#10 especially.

Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 12825
Experience: B.A.; M.B.A.; J.D.
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