A seriously injured worker can accumulate significant debt while out of work. Even if the Employer pays the required workers compensation benefits, the amount is often far less than the worker was earning prior to the injury. It is sometimes necessary to consider a bankruptcy case in order to protect any settlement amount from claims by creditors. Careful consideration of the client’s financial situation and the applicable bankruptcy law is critical in this situation.

If the injured worker has resided in Georgia for more than two years, it is likely that a bankruptcy case can be used to get debt relief and protect a workers compensation settlement. The Georgia bankruptcy exemptions are found in Section 44-13-100 of the Georgia Code. There is an exemption for payment on account of personal injury of up to $10,000. There is also an exemption for payment in compensation for loss of future earnings to the extent reasonably necessary for the support of the debtor and his/her dependents. So, in most cases the combination of these exemptions will fully protect a workers compensation settlement in a bankruptcy case.

If the worker has not resided in Georgia for more than two years, he/she may be required to use another State’s exemption code, which could be less generous in protecting settlement funds.

In either case, it is critical that the client get personal and specific advice from a bankruptcy specialist before filing a case.