Wrongful termination claim exempt in California chapter 7 bankruptcy?

Since you're in California, you cannot use the federal bankruptcy exemption for "loss of future earnings". California's exemptions do not really have anything similar and you probably can only use California's "wild card" exemption to protect that claim. Since you are aware of the wrongful termination claim, it is an asset you must include in your Chapter 7's Schedule B (even if you do not know the value of the claim). You should sit down with a bankruptcy attorney to see if and how you can exempt the claim and in what amount. If you have lived a substantial amount of time in states other than California in the past 2.5 years, you may have access to the federal bankruptcy exemptions.

I will first advise you to get a bankruptcy attorney to help you with this - it is complicated. Assuming California bankruptcy exemptions apply to you, there are two sets of exemptions to choose from to protect your assets - those found under California Code of Civil Procedure (CCP) Section 703 and those found under CCP Section 704. You will want to choose the set of exemptions that would provide you with the greatest protection for your assets. Your claim against your former employer may not be the only asset you want to protect; an experienced bankruptcy attorney can look at your entire picture and tell you which set of exemptions would provide you with the greatest scope of protection for your assets. That said, there is no "general exemption for loss of future earnings". What you may be referring to is a personal injury exemption found under CCP Section 703.140(b)(11)(E) that covers loss of earnings stemming from personal injuries; whether this applies in your situation would require further research. State law defines the scope of these exemptions; what you can ultimately protect, and how much, will ultimately depend on the breakdown of your recovery. If you do use the CCP Section 703 set of exemptions, you may want to use the wildcard exemption [CCP Section 703.140(b)(5)] to protect your recovery (in addition to other applicable exemptions), assuming you are not already using this exemption to protect other assets. I am aware of one case that said emotional distress damages stemming from a wrongful termination case can be protected using the personal injury exemption CCP Section 704.140; I'll attach the link below. Caution: case law changes constantly; by the time you read this, the case may no longer be good law. Also, this case only applies to CCP Section 704.140, which is not available to you if you use the CCP 703 set of exemptions. Speak to an attorney to determine the best strategy! Once you are in bankruptcy, the bankruptcy trustee will have several options with regard to this asset. They can choose to administer it either by holding your bankruptcy case open to see if there is a non-exempt recovery that can be paid to creditors. They can also have their own attorneys prosecute your claim. Or they can choose to abandon the asset. You can file a motion with the bankruptcy court asking that the Trustee abandon the asset if you have grounds to show that the asset would be burdensome of of inconsequential value to benefit the estate, for example, because the proceeds would be fully exempt leaving nothing or very little for the creditors to receive. I want to emphasize that this is not a do-it-yourselfer. Get a bankruptcy attorney to help you. Assets are regularly lost in bankruptcy that otherwise could have been protected if only an attorney had been involved.

I agree with Ms. Larkin on everything she said. California's two sets of exemptions are especially complex and each offer benefits/risks that should be analyzed by a bankruptcy attorney. There is a small benefit of having the trustee take over your claim: you don't have to worry about prosecuting it yourself and you are guaranteed to get whatever amount you exempt, as well as surplusage after the trustee pays your creditors (and him/herself), once the trustee fully prosecutes or settles the claim. Of course, there is no way to predict how the trustee will handle the claim once it is taken over. S/he may choose to settle it for an amount you think is completely ridiculous or proceed in ways you think are not in your best interest (which, honestly, is not the trustee's concern).

I agree with the other attorneys. You cannot do this without an attorney. Even if you claim the correct exemption without representation, you could find yourself in a situation with a trustee who wants to take the claim from you. Even if the claim is not exempt, if you have an attorney, they can negotiate with a trustee, that in exchange for your cooperation in the suit, you get a percentage of the claim. I hope this helps you. Good luck.