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Click here for the full text of this decision FACTS:Toby James Sinclair filed for Chapter 7 bankruptcy in Louisiana, a state that has opted out of federal bankruptcy exemptions, eight days after he deposited a payroll check of $1,843.02. At the time Sinclair filed his petition, his account balance was $2,045.75. The bankruptcy trustee filed a turnover request for the funds in the checking account, but Sinclair said that La. Rev. Stat. 13:3881 allowed him to exempt 75 percent of his wages from the bankruptcy process. Section 13:3881 says that 75 percent of a person’s disposable earnings for any week may be exempt. The statute then defines “disposable earnings” as meaning the part of a person’s earnings left after the deduction from those earnings of “any amounts required by law to be withheld and which amounts are reasonable and are being deducted in the usual course of business at the time the garnishment is served upon the employer for the purpose of providing benefits for retirement[.]“ The bankruptcy court agreed with Sinclair, but the district court reversed, determining that the disposable earnings exception only applied in the context of garnishments, and it only applied to wages that were still controlled by an employer. Sinclair appeals. HOLDING:Affirmed. The court notes that two Louisiana intermediate court cases have interpreted 13:3881 and they each reached different conclusions. State courts outside of Louisiana have also interpreted similar statutes. These cases have not all agreed that disposable earnings exemption statutes do not continue to apply to wages once they have taken another form, such as when they are placed in an account or when they are being held in a retirement fund. The court looks at federal court jurisprudence and, based on them, develops a list of distinctive characteristics applicable to 13:3881: 1. the statute’s broad introductory statement is limited by a specific reference to garnishment within the definition of “disposable earnings”; 2. the statute does not include language referring to “compensation paid,” which would indicate that the statute applied to funds already received by the employee, instead of those still within the employer’s control; and 3. there is no statement from Louisiana’s high court compelling a particular interpretation. Furthermore, the language of 13:3881 resembles the statute exempting workers’ compensation benefits in that it does not specifically refer to benefits that have been received. And Louisiana courts have interpreted the workers’ compensation statute as not applying to benefits that have not been received. OPINION:Prado, J.; Barksdale, DeMoss and Prado, JJ.

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