diff --git a/src/services/worker/agents/ResponseProcessor.ts b/src/services/worker/agents/ResponseProcessor.ts
index 48cf0809..c724fe06 100644
--- a/src/services/worker/agents/ResponseProcessor.ts
+++ b/src/services/worker/agents/ResponseProcessor.ts
@@ -219,7 +219,9 @@ async function syncAndBroadcastObservations(
   // This runs per-observation batch to ensure folders are updated as work happens
   // Only runs if CLAUDE_MEM_FOLDER_CLAUDEMD_ENABLED is true (default: false)
   const settings = SettingsDefaultsManager.loadFromFile(USER_SETTINGS_PATH);
-  const folderClaudeMdEnabled = settings.CLAUDE_MEM_FOLDER_CLAUDEMD_ENABLED === 'true';
+  // Handle both string 'true' and boolean true from JSON settings
+  const settingValue = settings.CLAUDE_MEM_FOLDER_CLAUDEMD_ENABLED;
+  const folderClaudeMdEnabled = settingValue === 'true' || settingValue === true;
 
   if (folderClaudeMdEnabled) {
     const allFilePaths: string[] = [];
diff --git a/src/shared/SettingsDefaultsManager.ts b/src/shared/SettingsDefaultsManager.ts
index b2c6b524..5adc82dc 100644
--- a/src/shared/SettingsDefaultsManager.ts
+++ b/src/shared/SettingsDefaultsManager.ts
@@ -124,10 +124,11 @@ export class SettingsDefaultsManager {
 
   /**
    * Get a boolean default value
+   * Handles both string 'true' and boolean true from JSON
    */
   static getBool(key: keyof SettingsDefaults): boolean {
     const value = this.get(key);
-    return value === 'true';
+    return value === 'true' || value === true;
   }
 
   /**