Lets say I completed a chapter 7 discharge, and at the same time with a seperate legal agency recovering lost wages from a work related injury. I know the wages and loss cannot be touched, but the medical expenses that got wiped out from the bankruptcy is the complication. It is very likely that the work comp insurance will end up cutting a check for the medical bills (that is normally what would happen) then my attorney would negotiate payment (because this is where there 20-30%) comes from in the first place. But those bills are gone from the chap 7 action. Anyone have any clue how that works?
1 Answer from Attorneys
I would need to know whether this is a third party private action which you and your attorney have brought against someone other than your employer or a worker's comp cases strictly against your employer. Either scenario which you mention is possible depending upon which of the two we have here. Unless the medical providers have a properly perfected lien against your claim, a bankruptcy (of which they received timely notice and were listed creditors) will allow you not to pay them if your discharge is granted. Also, if you agreed to pay them and told your attorney this, he would usually pay them, assuming that he disburses the settlement funds rather than the Department of Workforce Development controlling them. In a true worker's comp claim against the employer, it would be rare to have your attorney disbursing the funds, since this is instead usually ordered and controlled directly by the DWD, a State government agency. You need to discuss this both with your PI (or WC) attorney as well as with an experienced bankruptcy lawyer. You mention that parts of your award "cannot be touched." While this may be true if they are properly claimed as exempt, it is far from automatic. Please remember that I am not yet your attorney and will not be taking any action on your case, but you are still welcome to contact me during business hours at my in Racine if you still have more questions. Also, please see me on the web at www.jayknixonlaw.com, or, to read 15 years of my prior answers to consumer legal questions arranged by topic, please go to http://www.lawguru.com/answers/search/attorney/jknixon. Answers may contain attorney advertising materials.