Are settlements "EXEMPT" from creditors?

[Guest lindy]

If you have a settlement for LTD and win in court/mediation and get a lump sum check, wouldn't that be "EXEMPT" from any creditor you might not have paid yet?

I am understanding that if a settlement for "PHYSICAL/INJURY ILLNESS" is Exempt from creditors/property etc. I read this in some case won..

Does anyone know for sure? And would you know where the answer would be? What Court or Code?

Thanks.

[KIP KRAUS]

Lindy:

You have posted several questions regarding this “LTD Settlement”. Are we to assume that the LTD carrier originally denied your claim, you went to court and won? What exactly happened?

LTD benefits are far as I know are taxable income. There may be some tax relief for person who are totally disabled, but I’m not aware of them. The amount taxable to you depends on the % of the premiums you paid. Your employer must make a calculation of a three-year average as described in IRS Publication 952. Therefore, if the contribution was changed during any of these years the % taxable could be different than the current percentage split.

[Guest lindy]

Hi Kip,

Yes, I have posted several questions re: settlement. You can assume we are close to settlement! (Or else to court we go!) I have been through enough suffering since they denied. It was a big time wrongful denial on pre-existing. so...we went for it.

I am trying to find all answers so I have no surprises...I appreciate everyone's help so much. Lots of different opinions out there. At least one can research more though with all of this help.

DO You know if CREDITORS are EXEMPT from settlements of physical illness/injury??? I read somewhere in some code they are, but can't find it right now?

I'm not exactly sure what you mean by my employer must make a calculation for a "three-year average"(IRS Pub. 952. Is this something they should let me know about? I was not with the company 3 yrs. Does that matter? The contribution was 50/50 so I guess I'm taxed on 50%..

Found an awesome site last night with SO MUCH on it about ERISA/ Codes, IRS etc. etc. Did see some of which you speak in there.. it is http://benefitsattorney.com (Carol Calhoun, Atty.) (Watch it be part of this message board!) I do have a lot of cognitive problems so please bear with me. Thanks for your time and help!

[Guest b2kates]

Lindy, if you are talking about creditors, you are not talking about tax agencies, but other creditors? This issue then is really a state law issue as to exempt from judgment creditors.

In the past I authored a book, Keeping What's Yours. exemption and collectibility is a local issue, not a federal issue, unless you are in bankruptcy.