In short, workers' compensation benefits are not considered an asset of the debtor and are protected. The workers' compensation benefits would be listed in the bankruptcy petition but would be a fully protected exempt asset based on California law.
California Code of Civil Procedure section 703.140 (b)(10) gives the exemptions for the debtor's right to receive any of the following: social security benefits, unemployment compensations, local public assistance benefits, veteran's benefits, or disability, illness or unemployment benefits.
California Code of Civil Procedure section 704.160 also gives a similar exemption, stating that Workers' Compensation benefits/settlements are exempt, subject to exceptions made for domestic support obligations (child support).
If you have any questions about bankruptcy please call 1st California Law at (949) 735-8499 for a free attorney consultation.