Generally yes, in Illinois. There are certain rules called exemptions in each state, that allows people who file bankruptcy to protect certain things, like a set amount of equity in houses, cars, and household goods, among other things. Illinois law allows people to protect settlements from Workers Compensation claims, or the claim itself in full. It would make sense, as a matter of policy, to protect these funds. After all, these people got hurt at work, and the money is designed to compensate them for the time they cannot work.
However, what you do with the settlement money is important. Because you need to be sure you can “trace” the money, and keep it separate from any other money. Also, you can protect the payments you get from workers’ compensation before the case is settled.
You need to be careful to get the advice of a bankruptcy attorney to review your options, and how to accomplish your goals.
Daniel J Winter
LAW OFFICES OF DANIEL J WINTER
53 W. Jackson Blvd #725
Chicago, IL 60604