Man going to discuss his personal injury settlement with his attorney.

Can My Personal Injury Settlement Be Garnished?

  • May 11 2020

Personal injury or loss at the hands of someone else’s negligence can leave you emotionally, physically, and financially disadvantaged.  Often, loss of income and huge debts result. 

If you are pursuing a personal injury settlement through a California personal injury lawyer, or have already received settlement compensation, safeguarding those funds for future medical expenses, lost wages, and various other costs is vital.  

California, the Federal Government, and Your Injury Settlement

California personal injury attorneys are often asked, “Can my personal injury settlement be garnished?” The answer is both yes, and no. Individual injury awards are subject to different vulnerabilities and protections under state and federal law. 

  • In California, like most states, personal injury awards are subject to garnishment for child support arrears and back state and federal taxes owed.  While specific parameters govern the attachments, your injury settlement is vulnerable to garnishment for those reasons.
  • Concerning judgment creditors, however, California law stipulates personal injury settlements as exempt from garnishment. Proper management of your settlement money is key to protecting it from creditors seeking to garnish cash from your bank accounts.  

How Judgment Creditors Take Your Money

When creditors garnish your money, they are attempting to recover debts owed by you. After filing suit against you, creditors may be allowed by court order (judgment) to take funds directly from your bank accounts to satisfy repayment of debts.  

In California, a creditor can garnish up to an amount that is lesser of either 25% of a debtor’s weekly earnings or 50% of the amount by which the debtor’s earnings exceed 40 times the minimum hourly wage.   

Preventing Personal Injury Money from Being Garnished – 4 Important Steps

  • Open a dedicated account. 

 

Maintain a separate bank account into which you deposit only your settlement money.  Since personal injury awards are exempt from garnishment by creditors, it’s crucial to clearly identify settlement monies as such. Do not commingle personal injury award money with any other funds. 

  • Maintain detailed records.

Detailed records are essential to tracing the origin of your settlement money.  Keep organized copies of the settlement agreement and check with your bank account statements.  Coordinate all bank records with deposit and expense receipts pertaining to your settlement funds. 

  • Don’t use a bank account.

 

Prepaid debit and credit cards reduce exposure of your money to creditors while allowing you access to funds as needed. However, these cards aren’t without some drawbacks.  Prepaid bank cards often charge high fees, may have deposit restrictions, and aren’t accepted everywhere.  

  • Cooperate with your creditors.

 

Avoiding creditors will only lead to added stress as they aggressively pursue action against you to recover funds owed. Instead, relieve the worry of further legal action and help protect your settlement award by negotiating a payment schedule you can maintain while paying down your debt.  

California Personal Injury Attorneys – Helping You Keep Your Money

Advice from a qualified personal injury lawyer is vital to understanding the exposure of your settlement money to prospective creditors.  While there are protections afforded under the law, your injury settlement remains vulnerable to garnishment and collection if not properly managed from the outset. 

Take action to safeguard your settlement award and your future by speaking with your California personal injury attorney today. Contact us today for a free consult.

Posted in: Personal Injury


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