Summary:
After the filing of a Chapter 13 bankruptcy, Mr. Nevils received a lump-sum Worker’s Compensation award of $235,000. Over the Trustee’s objection, the bankruptcy court previously allowed Mr. Nevils’ exemption of the proceeds, without ruling at that time on whether such constituted disposable income. The Trustee, supported by the Bankruptcy Administrator, then brought a motion to modify, arguing that even though exempt, the award constituted a substantial and unanticipated change in circumstances and should be considered in calculating Mr. Nevils’ disposable income.
The bankruptcy court rejected this argument, finding that 11 U.S.C. § 522(c) provides “property exempted under this section is not liable during or after the case for any debt of the debtor that arose, or that is determined under section 502 of this title as if such debt had arisen before the commencement of the case….” Relying on Judge Doub’s opinion from In re Daniels, the bankruptcy court held that “[t]he clear language of [§ 522(c)] protects exempt property, regardless of form, from prepetition debts…[t]his express limitation cannot be ignored for purposes of defining disposable income under [§ 1325(b)]”). No. 11-08830-8-RRD, 2013 WL 365107, at *3 (Bankr. E.D.N.C. Jan. 29, 2013). As such, the bankruptcy court could not “equitably carve exceptions to these exemptions”.
For a copy of the opinion, please see:
Nevils- Exempt Workers Compensation Award
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