Worker’s compensation and bankruptcy in Minnesota

Worker’s compensation is supposed to make up for being unable to work due to injury, by paying employees a portion of their salary until the injury is fixed.

People come to speak with me about filing bankruptcy only when they feel that they are out of financial options, and one possible reason for money troubles is a work-related injury.

When people are injured on the job there are two financial problems, fewer hours meaning a smaller paycheck, and medical bills.

Worker’s compensation may be a person’s only source of income, so knowing whether or not you can keep it in bankruptcy is important.

Learn how to start a Minnesota worker’s compensation claim.

IS WORKER’S COMPENSATION EXEMPT IN BANKRUPTCY?

• Yes, in the vast majority of cases, worker’s compensation benefits are completely exempt in bankruptcy

“Exempt” is a good thing, it means that you get to keep the benefits because they are exempt from seizure by the bankruptcy trustee for the benefit of creditors.

Under Minnesota law, these compensation benefits are exempt in two ways.

1. They are exempt outside of bankruptcy

The first way is that they are exempt outside of bankruptcy.

• The law Minn. Stat. §176.175. says that worker’s compensation claims may not be assigned

“Assign” means transfer to someone else.

Since the benefits can’t be transferred to anyone else, creditors and the bankruptcy court can’t take them. This protection also works even if you never file bankruptcy.

2. They are exempt under federal law

The second way that these compensation benefits are exempt in bankruptcy is under federal law.

• The law 11 U.S.C. §522(10)(c) says that if someone files bankruptcy and chooses the federal exemptions instead of the Minnesota exemptions, then their worker’s compensation benefits are exempt

This means they don’t have to be paid into the bankruptcy court for creditors.

NEED WORKER’S COMPENSATION ADVICE?

If you feel that you need representation in a compensation claim, then I advise you to contact a Minnesota worker’s compensation attorney.

I do not practice worker’s compensation law.

WHAT TO DO NEXT

If you’re worried about losing your Workers Compensation filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota, then why not not speak to us now at 612.824.4357?

We’ll give you all the help and advice you need.

Alternatively, fill out our free Bankruptcy Evaluation Form to see if filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota is right for you.

We’re looking forward to helping you.

Photo Credit: © Oguzdkn | Dreamstime.com – Worker Injury Claim Hard Hat With Money And Pen On Photo