Yes, in some cases, depending on the creditor and debt in question, your settlement money may be seized to settle certain debts. You rightfully want to protect your settlement, so it’s important to talk to your Independence personal injury lawyer about what your accident-related debts are and how much you owe. They may be able to negotiate a higher settlement to cover your debts.
There is good news, though. Not all types of debts are eligible for seizure, so if you’re here asking yourself if creditors take my personal injury settlement amount automatically, the answer is no. But there are some things you must use your settlement to pay for; let’s take a closer look.
Do I need to repay medical expenses?
You likely incurred significant medical expenses for your accident injuries, so if you owe money to the doctor or hospital, you’ll have to pay those medical bills.
If you have private insurance or insurance through your employer, your insurance company may require you to reimburse them or may initiate a subrogation action to recoup the money it spent on your care. Likewise, if you receive Medicare or Medicaid, that agency will require repayment.
If you have medical liens, a lien a provider places against your future settlement, you must repay those medical expenses. Failure to fulfill that lien could result in the provider taking legal action against you.
When can my personal injury settlement be garnished?
Per Missouri state law, certain creditors do have a right to demand repayment from your settlement:
- Child support: If you owe child support, your settlement may be garnished to bring your obligations current. And, if you received a large settlement, one that significantly changed your financial status, then your child’s other parent may file a petition with the court to increase your monthly payments.
- Back taxes: If you owe the Missouri Department of Revenue (MODoR), the IRS, or both, then your settlement will be garnished for the amount you owe. The government will get its money one way or another, although you may be able to negotiate a payment plan with the revenue agency.
- Court-ordered Judgments: If you have a judgment against you that you haven’t settled yet, such as owing another party damages in a lawsuit, or if you owe your ex-spouse money from your divorce settlement, then the court could garnish your settlement to cover the outstanding balance. However, if you already have a payment plan in place and you’re current with it, then you may not have to forfeit your personal interest award to settle that judgment.
Garnishment isn’t automatic, though. The creditor must petition the court for garnishment, and a judge must approve it. Creditors cannot automatically seize your settlement funds. They must first obtain a court order through a formal garnishment process
How do I protect my personal injury award?
Once you receive a personal injury settlement, be careful where you put your money. If you simply deposit your check into one of your existing bank accounts, there’s a good chance it may be garnished. You could place the money in a separate account exclusively for paying your debts related to the accident, such as your medical bills.
Or, consider placing the money in a trust. You can financially benefit from the award and pay bills while shielding it from creditors. If you choose to set up a trust, ensure that you do so under the guidance of an experienced attorney to ensure the trust is properly established to protect your assets while still allowing you to use them as needed.
Protect your settlement with trusted legal guidance
If you’re concerned about losing part of your personal injury settlement to creditors, it’s essential to understand your rights and obligations under Missouri law. Not all debts are eligible for garnishment, and with the help of an experienced attorney, you may be able to preserve more of your compensation.
Do you need help with your personal injury case? Please contact Langdon & Emison at (866) 931-2115 for a free consultation with our personal injury attorneys.