Answered on Aug 09th, 2011 at 10:20 AM
You have to get court permission to do so, but the Trustee will likely fight it, since his job is to take unprotected assets like some of your settlement, and pay claims. And so what if he does? - your creditors will be paid - and you will get a discharge from those who do not file claims. You have to disclose the settlement, and exempt what you can from it. If you did not list the possibility in your schedules, then the court might consider you desire to dismiss to be a bad faith request and deny it.