At the hearing on the trustee’s objection to debtor’s exemption, the debtor’s worker’s compensation attorney testified that the redemption order allocated 100% of the award to wages. However, it was his opinion that 75% of the award should be allocated to wages and 25% to medical expenses. The attorney also told the court that if the debtor chose to obtain prosthetics, he would need 3 separate prosthetic hands during his life at about $65,000 per hand. Finally, he said that insurance companies do not issue checks until the time to file an appeal has passed, and that he has had clients wait 60 days to receive a check. The trustee called the debtor’s receipt and deposit of his check on the day after he filed his petition a “suspicious coincidence.” Unfortunately for the trustee, he forgot that a “suspicious coincidence” is not a legal argument, nor is it admissible evidence to support his position. Debtor also called on Captain Hook to testify as an expert witness. Hook testified that not a day goes by that he wished he had his hand and fingers back instead of a hook.

The court said there was nothing on the record to support the trustee’s suspicions other than the date on the check of September 23, 2011. The court found that the trustee failed to meet his burden of proof that the exemption was not validly claimed, and that the debtor did not receive the settlement check until after he filed for bankruptcy. “Based upon the plain meaning of 11 USC § 522(d)(10)(C), which states that the ‘debtor’s right to receive… a disability, illness, or unemployment benefit’ may be exempted, if the award is considered a disability benefit, the debtor’s settlement funds of $173,679.49 are exempt,’ the court said. “However, if the award is considered as loss of future earnings, it is exempt under 11 USC § 522 (d)(11)(E). At the time the petition was filed, the debtor had a right to receive the compensation for loss of earnings.” Trustee objection to exemption denied.

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.