The trustee then asked the court for a stay pending appeal, and asked the court to prohibit TCF National Bank from allowing the cash in the debtor’s account to be diminished in any amount less than $70,000. The trustee did not contest the court’s findings of fact, but raised a legal issue that workers’ compensation payments are not protected by Section 522(d)(11)(E). According to the trustee, Mr. big fat Meanie, this section protected only tort claims. While there is case law supporting the trustee’s position, the court noted that those cases were decided in the context of whether to exempt a worker’ compensation award under the more generous exemption provisions of Section 522(d)(10)) or the more restrictive provisions of 522(d)(11)(E). Section 522(d)(10) exempts “The debtor’s right to receive…© a disability, illness, or unemployment benefit." These cases were also decided before In Re Sanchez, where the court found that debtors may exempt a lump sum workers’ compensation redemption under Section 522(d)(11)(E) as longs as: (1) the payment is traceable to a payment in compensation of loss of future earnings of the debtor; and (2) only to the extent reasonably necessary for the support of the debtor and any dependent of the debtor. Given the very detailed and careful analysis of both prior case law and legislative history in Sanchez, the court in this case was confident that its reliance on that conclusion was sound. Consequently, the court found little likelihood that the trustee would be successful on appeal. The court also noted that if it issued the stay, the debtors would be deprived of money they needed to pay their necessary living expenses. Therefore, the equities favored denying the stay.

The extent reasonably necessary for the support of debtor or his dependent is a flexible standard that takes into consideration the personal circumstances of the debtor. A debtor with substantial income from somewhere else may not need the award for support.

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than five thousand successful bankruptcy cases in California. He speaks Mandarin and Fujien and looks forward to discussing your case with you personally. Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.