Author: Andrew M. Thaler
Spiros Avramidis
As discussed in prior articles, it is imperative that debtors consult with an experienced bankruptcy attorney to receive accurate advice on what property is protected from creditors. One tricky area that occasionally arises is whether workers’ compensation benefits are exempt. The answer: it depends.
The starting point of any exemption analysis is whether a debtor is utilizing the exemption scheme available under either Federal law or New York law. The applicable statute under Federal law is 11 U.S.C. § 522(d)(10), which provides that “[t]he following property may be exempted … (10) The debtor's right to receive … (C) a disability, illness, or unemployment benefit.”[1] While the applicable New York statute is Debtor & Creditor Law § 282(2)(e), which provides as exempt “[t]he debtor's right to receive or the debtor's interest in: … (c) a disability, illness, or unemployment benefit.”[2]
The starting point of any exemption analysis is whether a debtor is utilizing the exemption scheme available under either Federal law or New York law. The applicable statute under Federal law is 11 U.S.C. § 522(d)(10), which provides that “[t]he following property may be exempted … (10) The debtor's right to receive … (C) a disability, illness, or unemployment benefit.”[1] While the applicable New York statute is Debtor & Creditor Law § 282(2)(e), which provides as exempt “[t]he debtor's right to receive or the debtor's interest in: … (c) a disability, illness, or unemployment benefit.”[2]
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