Expecting Settlement

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psp2001

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Expecting Settlement
« on: January 16, 2015, 10:41:56 PM »
Hi there,

I was on disability but have lost that and now I am considering declaring bankruptcy.  I have no income at all, but I am expecting/hoping for a disability settlement from insurance company in next 9-12 months.  Will I lose the settlement if I declare before or after receiving it? 

Thanks!

Paul

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NotATrust-E

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Re: Expecting Settlement
« Reply #1 on: January 17, 2015, 01:10:35 PM »
In the initial assessment process before filing for bankruptcy, the trustee will ask if you have received any funds within a certain amount of time, and you would be required to disclose the amount and when you received them. The trustee's primarily concern will be that the disposition of the funds. It's one thing if you used the money to equally pay off creditors; he/she would take a different point of view if you went on vacation or paid off personal creditors (friends/family), etcetera.

If you received the funds while bankrupt, it gets tricky. Disability settlements can either be considered income or property, depending on the situation. If it is considered income, then you might be assessed for surplus income. It depends on the amount. If the settlement is property, then 100% goes to the trustee for distribution to your creditors. I suggest you talk to a trustee to determine how your settlement would be treated. For your own reference, you can check out sections 67 and 68 of the Bankruptcy and Insolvency Act, along with Directive 11R2.




 

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