The bankruptcy law was written to allow debtors a certain amount of dignity and self-respect to which all members of society are entitled. In the bankruptcy context, exemptions serve the purpose of helping the debtor obtain a fresh start.
A debtor can file bankruptcy to erase all their debts and protect their right to compensation for injury losses, and payments for lost earnings.
Bankruptcy Code section 522(d)(5), 522(d)(10) and 522(d)(11) contain a gold mine of exemptions. A debtor can use the “wild card” exemption in 522(d)(5) to keep (exempt) $11,975 of the debtor’s accident claim. A debtor can double-up 522(d)(5) & (10) to protect over $33,600 and simultaneously erase all their debt in a bankruptcy case.
Section 522(d)(10) allows a debtor to keep (exempt) $21,625 of proceeds for a personal injury claim, excluding pain and suffering or actual out of pocket expenses.
Section 522(d)10)(C) allows a debtor to retain (exempt) the debtor’s right to receive a disability, illness, or unemployment benefit, with no limit on the dollar amount.
Section 522(d)(11)(B) allows an exemption for payments on account of wrongful death, to the extent needed for the support of the debtor or the debtor’s family.
Section 522(d)(11)(E) allows the debtor to exempt payments on account of loss of future earnings, to the extent needed for the support of the debtor or the debtor’s family. This section should also apply to no-fault wage loss claims, or personal injury awards, arising from automobile accidents.
If you have an accident-based personal injury case and are filing bankruptcy, read these sections carefully with your attorney. You’ll be happy you did.
