Opinion and Order Overruling Trustee's Objection to Amended Exemptions. The Chapter 7 Trustee objected to the Debtor’s claimed exemption in $204,000 she received postpetition in settlement of a prepetition personal injury claim. The Debtor attempted to exempt the entirety of the settlement amount under N.C. Gen. Stat. § 1C-1601(a)(8), which allows North Carolina debtors to exempt “compensation for personal injury.” The Trustee objected, arguing that compensation for a prepetition personal injury claim may not be exempted unless such claim was liquidated or settled in favor the claimant prior to the petition date. The Debtor, supported by the Bankruptcy Administrator, countered that § 1C-1601(a)(8) exempts the substantive right to compensation itself—including an unliquidated interest such as a pending cause of action that asserts the right to such compensation—and not merely funds already in hand.
     Given the novelty of the question, the absence of any controlling caselaw, and the lack of statutory definitions, the Court first considered a plain-meaning approach but found that none of the dictionary definitions directly speak to when an interest in compensation arises or whether an individual can possess a present interest in compensation that is not yet fixed through judgment or settlement. As such, the Court found the meaning of the term ambiguous and open to both a broad and narrow reading. Turning to broader statutory context, the Court observed that, unlike several other state exemptions for personal injury, § 1C-1601(a)(8) is notably lacking in any temporal qualifiers following the word compensation that could be read as forward or backward-looking temporal restrictions on the types of exemptible compensation for personal injury. The  Court declined the Trustee’s invitation to insert a temporal requirement into § 1C-1601(a)(8) where the text did not expressly provide for it, especially in light of the generous interpretative rule set forth by the North Carolina Supreme Court that “debtors’ claims for exemptions are to be given a liberal construction in favor of the exemption.” In re Crosson, 649 B.R. 668, 669 (Bankr. M.D.N.C. 2023) (citing Elmwood v. Elmwood, 244 S.E.2d 668, 678 (1978)).
     The Court next found that, although unliquidated at the time of the bankruptcy filing, the Debtor held a prepetition property interest in compensation for personal injury that she could retain and exempt under § 1C-1601(a)(8). The Court observed that North Carolina law recognizes an interest in the proceeds from a personal injury suit that arises concurrently with, but is distinct from, the personal injury claim itself. Charlotte-Mecklenburg Hosp. Auth. v. First of Ga. Ins. Co., 455 S.E.2d 655, 657 (N.C. 1995). Therefore, the Court found the Debtor held at least two prepetition interests under North Carolina law: a claim or cause of action for personal injury and an enforceable interest in the proceeds, including compensation for personal injury, that she recovers on that claim.
     The Court found its interpretation of § 1C-1601(a)(8) was bolstered in two key respects. First, the amendment history of § 1C-1603 shows the General Assembly amended the language on the form notice for claiming the personal injury exemption in one critical respect —to explain that judgment debtors can exempt not only compensation already “received” but also compensation to which a debtor is “entitled.” Second, the reliance interest in the longstanding interpretation of § 1C-1601(a)(8) further supported a broad reading of “compensation for personal injury.” The Court surveyed every reported case in which a bankruptcy debtor sought to exempt contingent but-as-yet-unreceived compensation for a prepetition personal injury, finding that the presiding judge or panel in every case presumed or noted that the contingent interest would be exempt under § 1C-1601(a)(8).
     For those reasons, the Court overruled the Trustee’s objection finding the phrase “compensation for personal injury” in § 1C-1601(a)(8) encompasses compensation for a prepetition personal injury that is received both before and after the bankruptcy filing.