473 B.R. 218
Bankr. W.D. Mich.2012Background
- Debtor seeks exemption of worker’s compensation settlement funds under 11 U.S.C. § 522(d)(10)(C) and/or § 522(d)(11)(E).
- Redemption agreement dated Sept. 6, 2011 for lump-sum $193,143.60 with funds allocated to wages and expenses; order approved by Michigan agency.
- Finalization occurs after a 15-day appeal period; settlement funds’ payment timing disputed.
- Debtor files Chapter 7 on Oct. 3, 2011; schedules initially list value as unknown, then amended to disclose $178,679.49 and the exemption claim.
- Funds were deposited Oct. 4, 2011 and remained in Debtor’s possession; Trustee objects to exemption; evidentiary hearing held May 1, 2012.
- Court concludes funds were exempt under § 522(d)(10)(C) and/or § 522(d)(11)(E).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether settlement funds are exempt under § 522(d)(10)(C) or § 522(d)(11)(E). | Dang asserts funds not yet received are exempt as disability benefit; if treated as future earnings, exempt under § 522(d)(11)(E). | Trustee contends funds were received pre-petition or are not properly traceable; exemption invalid. | Exemption upheld; funds exempt under § 522(d)(10)(C) and/or § 522(d)(11)(E). |
Key Cases Cited
- In re Schramm, 431 B.R. 397 (6th Cir. BAP 2010) (exemption liberality; burden on objecting party)
- In re Williams, 181 B.R. 298 (Bankr. W.D. Mich. 1995) (lump-sum workers’ comp not yet received; exemption if not yet received)
- In re Michael, 262 B.R. 296 (Bankr. M.D. Pa. 2001) (traceability and timing considerations for exemptions)
- United States v. Ron Pair Enters., Inc., 489 U.S. 235 (1989) (plain meaning of statute governs)
- White v. Stump, 266 U.S. 310 (1924) (exemption determinations grounded in statutory text)