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Bankruptcy laws when used well can help individuals get out of massive debt and get a fresh start.  Unfortunately, sometimes businesses can use it to screw over their employees who are owed wages or vendors who are owed payments.  You can be owed thousands of dollars and end up with nothing.

For injured workers in Illinois, a bankruptcy can affect your case.  Unlike workers who are simply owed wages, injured workers don’t usually end up getting shut out of compensation they are owed.

For most companies that go under, they, as required by law, carry workers’ compensation insurance.  So even if they are out of business, their insurance will still cover your injuries.  When they file for bankruptcy it could put a temporary pause on your case.  That is called a “stay.”  If that happens, your lawyer can go in to court and get an order that allows the work comp cases to be processed because the employer isn’t paying any money toward the case.  In other words, your receiving work comp benefits isn’t unfair to the workers and vendors who are owed money.

One the stay is lifted, the case will proceed as normal. And quite honestly, in some cases there is never even a delay.  So for most injured workers, you don’t have to stress that your employer is bankrupt.  In fact, if you have any restrictions about your job duties due to your injury you can receive TTD benefits because there is no job to return to.  This is true even if your employer was accommodating your restrictions before they shut down.

Some bigger employers are self insured.  I’m talking about Amazon, United Airlines, The City of Chicago, UPS, etc.  These are organizations that are not likely to go bankrupt, but if they did there are protections in place that make sure injured workers don’t get denied the benefits they are owed.

The one work comp scenario where a bankruptcy can affect your case is when the work comp insurance company goes bankrupt.  That doesn’t happen a lot, but it does happen.  When it does, your benefits will be stopped for a while, but eventually the State of Illinois takes over through the Illinois Insurance Guarantee Fund.  They pay on cases when an insurance company goes out of business. It’s way better than nothing, but when they get involved cases tend to slow down and you lose some rights such as the ability to file for penalties when there is a delay in your payments.  Those cases can be frustrating because injured workers can rightly feel like they are being treated unfairly and we as lawyers don’t have the ability to solve problems as quickly.

The bottom line though is that no matter who your employer is, a bankruptcy doesn’t end your rights at all if you’ve been injured on the job.  Don’t listen to any employer, friend or insurance adjuster who tells you otherwise.

And as always, please contact us with any questions.