Bankruptcy and Personal Injury Settlements:
District of South Carolina

S.C. Code § 15-41-30(A)(12)(b), which states, in relevant part: (A)The following real and personal property of a debtor domiciled in this State is exempt from attachment, levy, and sale under any mesne or final process issued by a court or bankruptcy proceeding: . . . (12) The debtor’s right to receive or property that is traceable to: . . . (b) a payment on account of the bodily injury of the debtor or of the wrongful death or bodily injury of another individual of whom the debtor was or is a dependent.

In this case the trustee argued that a portion of Debtor’s personal injury settlement funds were for medical damages, not bodily injury, and were therefore not exempt. Debtor argued that all of the funds are directly attributable to Debtor’s personal, bodily injuries as a result of the accident, and were therefore fully exempt.

While some damages related to personal injury might be non-exempt, for example claims of loss of services and loss of consortium, In re McWhorter, C/A No. 05- 03135-JW (Bankr. D.S.C. Mar. 24, 2006), generally if the settlement agreement does not allocate settlement proceeds between the various causes of action and medical expenses are only one separate category of damages.

In this case the Court explained that it is not uncommon to send medical records and billing statements when making demands to insurance companies. However, the mere fact that the demand letters with attached medical records and billing statements does not establish the payments made by those companies were for medical expenses.

To prevail, the Trustee must produce evidence that the settlement contains a specific, non exempt, allocation of the proceeds.

If the settlement proceeds were paid to Debtor as a direct result ofan accident, and to compensate him for his bodily injuries. The entire amount of the settlement proceeds are exempt under S.C. Code § 15-41-30(A)(12)(b).