You Have a Structured Settlement | You Go Bankrupt | What Happens?

John Darer • June 4, 2023

How are Structured Settlements Affected by Bankruptcy?

structured settlements in bankruptcy

What Happens to Your Structured Settlement if you File for Bankruptcy?


How your structured settlement is affected depends on:

  • the type of bankruptcy you file
  • the laws of your jurisdiction.


In general, structured settlements are designed to provide long-term financial security and are often considered exempt or protected assets in bankruptcy proceedings. However, it's important to consult with a bankruptcy attorney or a financial professional to get accurate and up-to-date advice based on your specific circumstances and local laws.


Here are some key points to consider regarding structured settlements and bankruptcy:


What is Chapter 7 Bankruptcy?


In Chapter 7 bankruptcy, also known as liquidation bankruptcy, your non-exempt assets may be sold to repay your creditors. However, many jurisdictions have exemptions that protect certain assets, including structured settlements, up to a certain value. This means that if your structured settlement falls within the exemption limits, it may be protected from liquidation.


What is Chapter 13 Bankruptcy?


Chapter 13 bankruptcy involves creating a repayment plan to pay off your debts over a three to five-year period. Generally, structured settlements are considered income and are included in the calculation of your repayment plan. However, because structured settlements are often intended to provide ongoing support and may be necessary for your basic needs, the bankruptcy court may allow you to exclude the structured settlement payments from the repayment plan calculation.


State Bankruptcy Laws


State laws play a significant role in bankruptcy proceedings, including the treatment of structured settlements. Each state has its own set of exemptions and rules regarding bankruptcy, and some states may provide stronger protection for structured settlements than others.


Bruce W. Akerly, a bankruptcy attorney in Lewisville Texas, with the law firm of Akerly Law PLLC, points out that  because they do not own the annuity or have sold and/or assigned payments under an annuity, many debtors will not list, or forget to list, their annuity payment streams in bankruptcy.


Akerly says that "when preparing a schedule of assets for a bankruptcy filing, structured settlement payment rights must be properly and completely disclosed. This includes (a) all payments, whether guaranteed or life contingent, (b) near-term payments and (c) payments that may not be due for many years. It includes monthly, annual, lump sum and all other forms of payment"   Source: The Impact of Bankruptcy on Structured Settlement Payment Streams  by Bruce W. Akerly  January 31, 2023


Seek Professional Advice


It's  crucial to seek professional advice from a bankruptcy attorney to understand how your specific structured settlement may be affected by bankruptcy, taking into account your jurisdiction's laws and regulation


Last updated May 12, 2024




By John Darer September 17, 2025
The Allure of "Convenience" is a Tax Trap . QSF Qualification is not a single moment in time, but rather a continuing obligation to operationalize all the requirements, as well as those required for creation.
qualifed assignment release and pledge agreement
By John Darer September 15, 2025
A Qualfied Assignment Release and Pledge Agreement (QARP) is a type of qualified assignment that gives a structured settlement payee a security interest in the qualified funding asset pursuant to the Uniform Commercial Code (UCC).
Indiiduals with Disabilities Education Act
By John Darer September 13, 2025
It bears remembering that, prior to 1975, children in the USA with intellectual disabilities, physical disabilities and even sensory disabilities were not guaranteed access to a public education.
structured settlement beneficiary
By John Darer CLU ChFC MSSC CeFT RSP CLTC September 12, 2025
"All payments From a Structured Settlement Are Guaranteed" ?
By John Darer September 6, 2025
Does a Structured Settlement Have a "Free Look" Period Like Other Insurance?
qualified settleent fund and QSF
By John Darer September 3, 2025
Invalidation of Structured Settlement Arrangements Under IRC § 130. If the QSF loses its status due to revocation/ termination of the governmental authority’s continuing jurisdiction, any structured settlement arrangements pursuant to IRC § 130 become null and void.
most infomative structured settlement websites
By John Darer August 26, 2025
The 4structures.com website is one of the most comprehensive structured settlement resources, particularly for those who want detailed, expert-level information, according to Google AI
most informative
By John Darer August 22, 2025
Based on Grok's review of prominent sites as of August 2025, 4structures.com (including its associated blog at structuredsettlements.typepad.com) stands out as the most comprehensive. Run by structured settlement expert John Darer, it offers detailed guides, and specialized insights
fountain
By John Darer August 17, 2025
Retained asset accounts for life insurance beneficaries, are temporary accounts that earn interest, give you time to breathe and give you time to figure it out.. Retained asset accounts are pay nterest from the date of death to date of settlement of the claim as a general practice,
knuckles
By John Darer August 16, 2025
How to avoid a "Knuckles Sandwich" when entering into settlement of claims or lawsuits involving taxable damages, or elements of taxable damages. What is the intent of the Payor? What happens if the intent of Payor is not clearly set forth in the settlement agreement?
More Posts