Health Savings Accounts and Bankruptcy

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country, as they may be a harbinger of things to come in districts in which I practice and can be used to help Debtors get the financial relief they need.

Here is an interesting case concerning the availability of a Health Savings Account to a Trustee for liquidation in a Chapter 7.



11th Circuit: Ch 7 Debtor could Not Exempt Health Savings Account. Debtor tried to use state law that exempted Pensions.

Debtor filed a petition for Chapter 7 bankruptcy and claimed the assets in her health savings account (HSA) as property exempt from the bankruptcy estate. On appeal, the court certified the following questions to the Supreme Court of Georgia: 1. Does a debtor’s health savings account constitute a right to receive a “disability, illness, or unemployment benefit” for the purposes of O.C.G.A. 44–13–100(a)(2)(C)? 2. Does a debtor’s health savings account constitute a right to receive a “payment under a pension, annuity, or similar plan or contract” for the purposes of O.C.G.A. 44–13–100(a)(2)(E)? Because the Supreme Court of Georgia answered both questions in the negative, debtor’s arguments on appeal are foreclosed. The court concluded that, under Georgia law, debtor was not entitled to claim the assets in her HSA as property exempt from the bankruptcy estate. The court affirmed the judgment.

The idea of Health Savings Accounts being accessible to a Trustee is somewhat baffling. Most HSAs will only disburse funds after showing proof of a medical expenditure. If a Trustee stands in the shows of a debtor, why does not the HSA administrator laugh as hard at the Trustee as they do to the individual when asked for a non-medical disbursement?

If a Trustee states they intend to cash in an HAS, shouldn’t the response be a respectful, “Good luck with that”?


Read the entire opinion here


About the blogger: Michael Curry of Curry Law Office in Mount Vernon, Illinois has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!



One thought on “Health Savings Accounts and Bankruptcy

  1. Pingback: The Mooney opinion – Health Savings Accounts and bankruptcy | Curry Law Office

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