When can a creditor claim a workers’ compensation award from a debtor who has filed for bankruptcy in Illinois? That question is at the heart of a recent case that is heading to the Illinois Supreme Court. In the case of In re Elena Hernandez, the debtor filed for Chapter 7 bankruptcy. Among her debts were more than $100,000 that she owed to healthcare providers for treating a work-related injury. She claimed a bankruptcy exemption for her $31,000 workers’ compensation settlement. The healthcare creditors contested the exemption, stating that it unreasonably undermines their ability to collect on the debt. Both the bankruptcy court and a circuit court agreed with the creditors, but the appellate court saw enough evidence on both sides of the argument to ask Illinois’ highest court to make a definitive ruling. Workers’ Compensation and Debt A workers’ compensation claim is meant to cover the actual cost of an employee’s work-related injury,…
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