Would the $20,000 settlement count towards your income?
Maybe - I don't want to make a suggestion that I can't back up. However, there are two things to consider.
1) If this does happen AND the trustee says it counts as income, you can apply for mediation under Section 68(6), where you can mediate the amount payable.
2) Surplus income only counts if your wife is part of your "Family Unit" under Directive 11R2, which states: 'The bankrupt's family unit includes... any persons who reside in the same household and who benefit from either the expenses incurred or income earned by the bankrupt, or who contribute to such expenses or earnings'. So if you don't benefit from the earnings because you are living apart, this might not apply.