Q: Law suit loan company took loan money after I filed bankruptcy.
I took a loan against my workers comp case in 2018. I filed chapter 7 bankruptcy in December 2020, bankruptcy was discharged April 2021 with the loan company on the bankruptcy and they did not contest the discharge. WC attorney office paid the loan company in December 2021 when my case settled not knowing the loan was in bankruptcy. Now the loan company said they would only give me half of the money back is that legal? If not what kind of attorney do I need to hire to get a full refund?
A: In all probability the lender had a perfected security interest in the settlement. While any personal liability on your part was discharged, the lien would survive the discharge unless you successfully moved to avoid it. The basis for such avoidance would normally be that the lien somehow impaired one of your exemptions. Without knowing which exemptions exist in your state it is not possible to say whether the lien impaired one of them.
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