Debtor’s Personal Injury Proceeds Remained Exempt Even After Commingled with Other Funds

Debtor’s Personal Injury Proceeds Remained Exempt Even After Commingled with Other Funds

The Debtors filed their Voluntary Petition under Chapter 13 of the Bankruptcy Code on March 15, 2017. On that date, the Debtors listed an interest in an account at Eastman Credit Union (the “Account”) containing personal injury proceeds with a value of $8,765.00 on
Schedule A/B. The same account was listed as exempt on Schedule C in the amount of
$8,765.00 pursuant to State law. The Account was opened in November 2016 with a deposit of $22,474.67, which were proceeds payable to Debtor-Wife as a result of a personal injury lawsuit settlement.

On the date the Chapter 13 Petition was filed, the Account actually held $11,100.63.
On April 11, 2017—after the Chapter 13 Petition was filed, but prior to the 11 U.S.C.
§ 341 Meeting of Creditors (the “341 Meeting”)—$1,300.00 was transferred from a separate
account into the Account. This $1,300.00 transfer “was attributable to both tax refund monies
and Debtor-Husband’s employment income.”  On May 1, 2017, following the 341 Meeting, the Trustee filed the Objection on the basis that the personal injury proceeds had been commingled. On April 14, 2017, $1,300.00 was transferred out of the Account into the separate account. “On April 25, 2017, all of the tax refunds including the $1,300 were transferred” from that separate account to the Trustee.

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