As the economy continues a frustratingly slow recovery from the "Great Recession," many businesses and individuals alike still struggle to keep themselves financially afloat. Its toll is reflected in the continued high-rate of unemployment and ongoing layoffs. A significant effect of this downturn has been a rise in bankruptcy filings. With debt outpacing income, individuals and businesses have increasingly turned to filing for bankruptcy to relieve the financial pressure. For instance, in Illinois approximately 41,000 bankruptcy filings were made in 2007. By 2010, that number had doubled to 82,000. With this upsurge comes a growing concern for the many Illinois workers who are receiving or are in the process of filing for workers' compensation benefits. Whether they personally or their employer is declaring bankruptcy, the question is the same: "How will bankruptcy affect my workers' compensation benefits?"
Personal Bankruptcy
When an individual files for bankruptcy in Illinois, their assets and income are taken into consideration. These items are used to qualify them for eligibility, to choose the type of bankruptcy to be filed, and to determine what must be sold and/or paid to creditors. If you have or are filing for workers' compensation benefits, you may be worried that this amount will disqualify you or that your award payment will be used to pay off your debts. As many injured workers facing bankruptcy are doing so as a result of their injury, this would be a state of "out of the frying pan, into the fire." Thankfully, the state of Illinois considers workers' compensation benefits to be exempt property. If you have received these benefits under Illinois law, they are protected from attachment or garnishment by the creditors in your personal bankruptcy case.
Employer Bankruptcy
A worker feels a range of emotions, from panic to confusion, when their employer declares bankruptcy. These feelings are heightened for the injured worker receiving or filing for workers' compensation. They often worry if they will lose their award payments and/or benefits if the company closes or their debt is discharged. The good news is that if your employer was required by Illinois law to provide you with workers' compensation coverage, you often are protected in the event they file bankruptcy. If your employer offers coverage through a private insurer, the insurer is still responsible for paying on those claims. If your employer was self-insured, you may be covered by the Illinois Insurance Guaranteed Fund. This fund provides claim coverage for self-insured companies and/or insurance providers which become insolvent. However, be aware that not all employers are eligible for coverage by the fund. Also, though you may still be covered, often bankruptcy proceedings cause delays in payments and the processing of claims. Be certain to contact your Illinois workers compensation attorney if your employer or insurance provider declares bankruptcy or goes out of business.
Personal Bankruptcy
When an individual files for bankruptcy in Illinois, their assets and income are taken into consideration. These items are used to qualify them for eligibility, to choose the type of bankruptcy to be filed, and to determine what must be sold and/or paid to creditors. If you have or are filing for workers' compensation benefits, you may be worried that this amount will disqualify you or that your award payment will be used to pay off your debts. As many injured workers facing bankruptcy are doing so as a result of their injury, this would be a state of "out of the frying pan, into the fire." Thankfully, the state of Illinois considers workers' compensation benefits to be exempt property. If you have received these benefits under Illinois law, they are protected from attachment or garnishment by the creditors in your personal bankruptcy case.
Employer Bankruptcy
A worker feels a range of emotions, from panic to confusion, when their employer declares bankruptcy. These feelings are heightened for the injured worker receiving or filing for workers' compensation. They often worry if they will lose their award payments and/or benefits if the company closes or their debt is discharged. The good news is that if your employer was required by Illinois law to provide you with workers' compensation coverage, you often are protected in the event they file bankruptcy. If your employer offers coverage through a private insurer, the insurer is still responsible for paying on those claims. If your employer was self-insured, you may be covered by the Illinois Insurance Guaranteed Fund. This fund provides claim coverage for self-insured companies and/or insurance providers which become insolvent. However, be aware that not all employers are eligible for coverage by the fund. Also, though you may still be covered, often bankruptcy proceedings cause delays in payments and the processing of claims. Be certain to contact your Illinois workers compensation attorney if your employer or insurance provider declares bankruptcy or goes out of business.
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