Are My Worker’s Compensation Benefits Exempt in a Chapter 7 Bankruptcy?

First, let us explain what the definition of Wisconsin worker’s compensation is. In 1911, Wisconsin adopted a Workmen’s Compensation Act. According to the Wisconsin Department of Workforce Development, “Worker’s Compensation is a system of no fault insurance that provides wage replacement and medical benefits to employees for accidental injuries or diseases related to the employee’s work. The intent of the law is to require an employer to promptly and accurately compensate a worker for any injury suffered on the job, regardless of the existence of any fault or whose it might be… In return, the Act limits the amount that a worker can recover. Workers are only entitled to (1) certain wage loss benefits, (2) the cost of medical treatment, and (3) certain disability payments.”

Wisconsin workers compensation Chapter 7 bankruptcyIf you have been injured at work and your Wisconsin worker’s compensation benefits are currently your only form of income, you are probably wondering what would happen to your benefits if you filed a Chapter 7 Bankruptcy. Bankruptcy is top of mind when a person has been injured, income has been slashed, and bills are piling up. You’re not alone in this line of thinking. Below are a few facts regarding Wisconsin worker’s compensation and Chapter 7 Bankruptcy.

1. You must choose whether to use state or federal exemptions in your bankruptcy. In Wisconsin, you may use either the Wisconsin state exemptions or the federal bankruptcy exemptions. You cannot mix and match federal and state exemptions. However, if you use Wisconsin’s state exemptions, there are a few federal ‘non-bankruptcy’ exemptions that you can use in addition to your Wisconsin exemptions. Consult with your experienced Chapter 7 Bankruptcy Attorney for assistance.

2. In Wisconsin, worker’s compensation benefits are considered income on the “means test” that determines whether you qualify for a Chapter 7 Bankruptcy.

3. Wisconsin worker’s compensation benefits are not considered an asset when filing a Chapter 7 Bankruptcy.

4. Wisconsin workers’ compensation is 100% exempt from confiscation during a Chapter 7 Bankruptcy. Wis. Stat. Ann. § 102.27, which reads:

102.27  Claims and awards protected; exceptions.

(1) Except as provided in sub. (2), no claim for compensation shall be assignable, but this provision shall not affect the survival thereof; nor shall any claim for compensation, or compensation awarded, or paid, be taken for the debts of the party entitled thereto.

(2)
(a) A benefit under this chapter is assignable under s. 46.10 (14) (e), 49.345 (14) (e), 301.12 (14) (e), 767.225 (1) (L), 767.513 (3), or 767.75 (1) or (2m).

(b) If a governmental unit provides public assistance under ch. 49 to pay medical costs or living expenses related to a claim under this chapter and if the governmental unit has given the parties to the claim written notice stating that the governmental unit provided the assistance and the cost of that assistance, the department or the division shall order the employer or insurance carrier owing compensation to reimburse that governmental unit for the amount of assistance the governmental unit provided or two-thirds of the amount of the award or payment remaining after deduction of attorney fees and any other fees or costs chargeable under ch. 102, whichever is less. The department shall comply with this paragraph when making payments under s. 102.81.

NOTE: Par. (b) is shown as amended eff. 1-1-16 by 2015 Wis. Act 55. Prior to 1-1-16 it reads:

(b) If a governmental unit provides public assistance under ch. 49 to pay medical costs or living expenses related to a claim under this chapter, the employer or insurance carrier owing compensation shall reimburse that governmental unit any compensation awarded or paid if the governmental unit has given the parties to the claim written notice stating that it provided the assistance and the cost of the assistance provided. Reimbursement shall equal the lesser of either the amount of assistance the governmental unit provided or two-thirds of the amount of the award or payment remaining after deduction of attorney fees and any other fees or costs chargeable under ch. 102. The department shall comply with this paragraph when making payments under s. 102.81.

History: 1981 c. 20, 391; 1983 a. 27, 192; 1985 a. 83; 1989 a. 64; 1993 a. 481; 1997 a. 191, 237; 1999 a. 9; 2005 a. 443 s. 265; 2007 a. 20; 2015 a. 55.”

 

Contact An Experienced Wisconsin Worker’s Compensation Attorney

If you are in the middle of a worker’s compensation claim or are already receiving Wisconsin worker’s compensation benefits, contact Wynn at Law, LLC when considering a bankruptcy filing. Wisconsin bankruptcy laws are very complex and there are always exemptions to the rules. Our knowledgeable Chapter 7 bankruptcy attorney offers a free initial consultation. Set your mind at ease, by receiving answers to all of your important questions concerning Wisconsin worker’s compensation benefits and Chapter 7 Bankruptcy. Contact Wynn at Law, LLC to schedule your free consultation. You can reach us by phone at 262.725.0175 or by eMail via our website’s contact page. Wynn at Law, LLC has bankruptcy offices located in Salem, Muskego, Delavan, and Lake Geneva, Wisconsin.

 

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*The content and material on this web page is for informational purposes only and does not constitute legal advice.

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