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Will I Lose My Long Term Disability Settlement Pay Out

I am in a second bankruptcy. When I filed, I was in the process of filing for long term disability. I was turned down twice and then won my appeal. I am two years into my bankruptcy and have just been paid out a settlement of $29,000. Will I Lose My Long Term Disability Settlement Pay Out? What if anything can the trustee take? I don’t the think the settlement is enough to pay off all my debts and reverse the bankruptcy. Also, during the last two years my husband’s income has gone up, giving us a possible surplus income. How is that calculated as my husband is not actually in the bankruptcy, will his surplus be counted as family income or is there a different calculator for that? Thank You.

One Response to “Will I Lose My Long Term Disability Settlement Pay Out”

Jillian Taylor-Mancusi, Trustee | B.A. | C.I.R.P said...

As per Directive 11R2 of the Bankruptcy and Insolvency Act, “the bankrupt must disclose the earnings and expenses of each member of the family unit by providing the trustee with income and expense statements for the entire period of bankruptcy…The bankrupt’s family unit includes, in addition to the bankrupt, any persons who reside in the same household and who benefit from either the expenses incurred or income earned by the bankrupt…” In determining the amount of the required payment to be made by the bankrupt, the amount is adjusted to the same percentage as the bankrupt’s portion of the family unit’s available monthly income.

We are to assume the $29,000.00 you have just received represents a lump sum payment of pre-bankruptcy income. Directive 11R2 also provides an example as to how the trustee is to calculate the amount to be paid into your bankruptcy estate. You should contact your trustee directly to make the calculation as additional information that you have not provided us is required.