Most worker's  compensation awards protected

Published 12/30/05

New Hampshire worker's compensation law provides substantial protections to workers involved in work-related injuries. One of these protections prevents creditors, in most instances, from being able to collect debt owed to them from a worker's compensation award or claim for compensation.

Pursuant to RSA 281-A:52, claims for compensation under the Worker's Compensation statute are not assignable and are exempt from the claims of creditors. Exceptions to this exemption are charges for doctors, hospitals, and other remedial care rendered in connection with the work-related injury. Claims of attorneys for services rendered to the worker in connection with the claim and approved by the court are also enforceable against the money award that the worker received from his worker's compensation claim. Further, claims for child support may be enforced against worker's compensation award.

If a creditor were to attempt to obtain an assignment on any future worker's compensation award, the assignment would be legally unenforceable. Likewise, if a creditor were to seek a judicial lien, also known as an attachment, against proceeds from a worker's compensation award, under most circumstances, that creditor would be unsuccessful.

Once a worker uses the compensation award proceeds to buy an asset, a question arises whether that asset is now also exempt from creditor collections.

The New Hampshire Federal Court noted in a 1994 bankruptcy appeal decision, In re: Williams , that where the bankrupt debtor proved that the used his workers compensation award proceeds to buy a car, that car was likewise exempt from creditors' collection efforts.

The Federal Court noted that the state's supreme court had the final say on the issue and that the federal court was merely ruling the way it thought the state court would rule if the case was presented to it.

The New Hampshire Bankruptcy Court in the 2004 decision, In re: Arsenault , decided that a bankrupt debtor who received a lump sum worker's compensation settlement award pre-bankruptcy filing and deposited it in a bank account in his name in trust for his son, but retained unlimited control over the award during his life could claim it as exempt under New Hampshire law.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.