Bankr. No.:
00-40405
Chapter:
7
Date of Decision:
December 7, 2000
Issue:
Whether pre-petition the debtor had assigned to her chiropractor her rights in a stated amount of insurance or lawsuit proceeds to cover her medical bill so as to exclude those funds from property of the bankruptcy estate?
Ruling:
The agreement between the debtor and her chiropractor created only a security interest for the chiropractor. The insurance proceeds the debtor received for a pre-petition personal injury thus became property of the estate and the debtor was able to exempt a portion of it. Further, the chiropractor's security interest was not perfected pre-petition so he was not able to establish a priority claim to the funds. The Trustee's settlement of the debtor's excess exemptions, which included the insurance proceeds, was therefore approved over the chiropractor's objection.
Full Bankruptcy Court Decision:
