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Compensation considered income?

I may be finanically compensated for a car accident that has left me with some injuries. My bankruptcy is in effect for another 5 months. If I receive compensation from an insurance claim do I need to report the monies to my trustee?

Posted from: Ontario

One Response to “Compensation considered income?”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

Firstly you have a legal obligation to disclose this potential insurance claim to your trustee immediately upon becoming aware of the possibility.

Now how these potential funds will be treated during bankruptcy really depends on the specific nature of the settlement. Likely if the settlement relates to pain and suffering you will simply get to keep the monies, but any portion that relates to loss of income or damage to property will likely be forfeited.

The best thing to do is to discuss this with your trustee, failure to do so is considered an offense under the Bankruptcy and Insolvency Act and would cause you substantial difficulty in the long term.