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Attorney2020, Attorney
Category: Bankruptcy Law
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Experience:  I am a practicing attorney. I have experience in business law, real estate law, bankruptcy and estates.
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I recently received a separation agreement with a lump sum

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Attachment: 2013-08-11_131155_settlement_agreement_2.pdf

I recently received a separation agreement with a lump sum payment as a Federal employee in lieu of filing workers' compensation claim. I have attached the actual settlement agreement for your information.  I was diagnosed with anxiety and depression due to job related stress. I was out on sick leave until it was exhausted and was still unable to return to work. I waived my rights for any type of workers' comp claim for the lump sum payment. I plan to file bankruptcy since I have no income and can now pass the Chapter 7 means test. My question is will my settlement agreement cash award be protected under Chapter 7 bankruptcy as a bankruptcy exemption? I have kept it in a separate bank account and not co-mingled other monies.

Attorney2020 :

Hi Terry,

Attorney2020 :
C.R.S. § 8-80-103. Assignment of benefits void - exemptions.

Any assignment, pledge, or encumbrance of any right to benefits which are or may become due or payable under articles 70 to 82 of this title shall be void. Except as provided in the "Colorado Child Support Enforcement Procedures Act", article 14 of title 14, C.R.S., such rights to benefits shall be exempt from levy, execution, attachment, or any other remedy provided for the collection of debt. Benefits received by any individual, so long as they are not mingled with other funds of the recipient, shall be exempt from any remedy for the collection of all debts except debts incurred for necessaries furnished to such individual, his spouse, or dependents during the time when such individual was unemployed or child support debt or arrearages as specified in article 14 of title 14, C.R.S. Any waiver of any exemption provided for in this section shall be void.
Attorney2020 :

As you stated before, you did not commingle these funds and therefore, your benefits obtained through your separation agreement will be exempt from your Chapter 7 bankruptcy under C.R.S. Section 8-80-103. However, make sure to keep these monies separate from any other accounts.

Attorney2020 :

I hope this helps. Please rate my answer. Please let me know if you need additional assistance. Thanks.

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