Exemptions; Assignment of Proceeds of Lawsuit
In re Carson (Carson v. Rhodes), 2005 Bankr. LEXIS 2673, Adv. No. 2673 (Bankr. N.D. Ga. November 9, 2005) (Bonapfel).
Prior to filing her petition, the debtor executed an “Assignment of Proceeds” in favor of the defendant purporting to assign the debtor’s interest in the proceeds from a lawsuit. The assignment was apparently to secure the debtor’s payment of a promissory note.
After the filing of her petition, debtor claimed the proceeds as exempt and sought a declaratory judgment that the assignment was invalid under Georgia law. The defendant assignee did not file a responsive pleading and the debtor sought entry of a default judgment.
The court held that the assignment was not an assignment of a right of action barred by O.C.G.A. 44-12-24, but was instead an assignment of the proceeds. Further, the assignment was not prohibited by O.C.G.A. 44-14-320 as the debtor had not alleged that the defendant had a lien or, if so, whether it was unperfected under Georgia law. Because the complaint did not allege sufficient facts to determine whether the assignment was invalid, the motion for default was denied.