The Learning Curve

New tricks for an old dog.

Payments for bodily injury are exempt, sort of.

“Considering the fundamental purposes of bankruptcy and tort law, a meager, inflexible, legislatively ascribed exemption for a personal injury recovery is a poor way to compensate an injured debtor and afford the fresh start necessary to prevent future costs to society, creditors, and insurance companies.”

JOSEPH J. BLYSKAL, III

The following quote is an introductory excerpt from a pay-per-view legal paper that rubbed me the wrong way and which started me thinking. I have not paid-to-view, so I’m not starting with very much. This present posting of mine may grow and change over time as I chew on the issue. There are two reasons the following excerpt attracted my attention. First, Kentucky exemption statutes have a provision that is similar to § 522(d)(11)(D) of the Bankruptcy Code that I never really though about much before. Second, the confusion and uncertainty seemingly caused by § 522(d)(11)(D) is foreign to me. The explanation that comes to me at first blush involves the fundamental difference between how personal injuries are valued in standard tort law and how they are valued in statutory compensation schemes like Workers’ Compensation. I’ll have to work out the details later, but this is a start.   It is a note to my self.

In terms of statutory interpretation, one of the most potentially troublesome federal bankruptcy exemptions is § 522(d)(11)(D) of the Bankruptcy Code, concerning the debtor’s right to receive “a payment, not to exceed $ 16,150, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependant.” 1 At first glance, the provision seems to be relatively straightforward, but on closer examination, the terms employed by the statute seem to cancel each other out by excluding every possible element of a personal injury recovery, rendering the exemption useless.

NOTE & COMMENT: Confusion Over § 522(d)(11)(D): What Congress Really Meant by Exempting Payments for “Personal Bodily Injury” and Why They Got It Wrong, by Louis J. Papera (2000) Full text available for purchase on Lexis

KRS § 427.150(2)(c) provides an individual shall be entitled to exemption of the following property:

A payment, not to exceed seven thousand five hundred dollars ($7,500), on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent.

11 U.S.C. § 522(d)(11)(D) exempts the debtor’s right to receive, or property that is traceable to:

[A] payment, not to exceed $15,000, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent.

KRS § 427.150(2)(c) is nearly identical to 11 U.S.C. § 522(d)(11)(D).

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Written by Tom Fox

03/20/2014 at 6:00 pm

Posted in Legal

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