Personal injury victims collect their settlements and claims when they are in a host of unique circumstances. At the time they receive their settlement, they may have outstanding liabilities or loans, for example. These kinds of additional auxiliary obligations can be a burden on your shoulders as you try to move ahead with your life.
You likely would have heard about creditor garnishing procedures to collect money from debtors, and you may wonder if your settlement may be at risk for any potential garnishment.
If you have been awarded a personal injury settlement claim recently or will receive one soon, you must take measures to ensure that this money is protected. Under most state laws, your injury settlement amount is “exempt.”
Therefore, a creditor would not be able to retrieve this money from you through bank garnishment. Furthermore, if you file for bankruptcy, you can keep the entire settlement, even if it amounts to several thousand dollars. The measures you will need to undertake to protect your settlement award are as follows:
Keep Your Injury Settlement Money Separate
The initial step is to keep your settlement money separate from other money, such as wages. It is advisable to deposit your personal injury settlement check in a distinct account and not deposit any other funds in this particular account.
You must park your settlement funds in a segregated, distinct bank account. You should not put your settlement monies and other money in the same account, which is known as “commingling funds.” Doing so eliminates protection or “exemption” for this money.
In case you and your family receive money from another source, ensure that you do not deposit this money in your personal injury settlement account unless you can prove through documentation that the amount deposited came from the settlement award. Summarily, do not deposit cash from another source or a traditional paycheck into the segregated settlement account.
If you can show that all money in your account is from the settlement award, you will be able to retain it if/when a creditor attempts to garnish the funds, or when filing bankruptcy. You must have a relevant “paper trail” or copies of deposit statements and the settlement check, which prove that the check was deposited into the segregated account, and no other deposits were made in this account.
Using Prepaid Cards
In emergencies, use prepaid debit cards. Protecting the settlement money becomes even more challenging if a creditor has been awarded a judgment against you. The creditor may have legal access to money parked in a traditional bank account. In these kinds of cases, depositing the settlement money onto a prepaid debit card will allow you to protect it while still being able to access it.
However, there are several caveats associated with these prepaid cards. Often, there are monthly fees associated with prepaid debit cards as well as limits on the amount of money you can deposit on the card. Moreover, some places might not accept such cards.
Structuring Your Injury Settlement to Prevent Garnishment
As you get ready to accept your personal injury settlement claim, it is crucial to assess your complete financial situation. In case you have outstanding debts, inform your lawyer about them.
Being mindful of your debts when you collect your settlement allows your lawyer to help structure the settlement in a manner that is most beneficial for you. Your lawyer will help you manage your claim’s complex aspects, including handling any garnishment threats with regards to your settlement.
Wage Garnishments in Personal Injury Settlement Claims
If you are considering whether to accept a settlement amount and wondering how to structure the settlement, wage garnishments are one aspect to consider. There are various ways to structure a settlement that you or a loved one is about to collect due to a personal injury lawsuit. Your attorney can provide helpful guidance on how to set up your settlement in a more advantageous manner.
However, you must be open and forthright with your attorney regarding your circumstances to enable them to correctly guide you in structuring your settlement. If your attorney has information on your goals, needs, and circumstances, they can create an effective and efficient plan for you.
Contact an Experienced Personal Injury Attorney
Do you have concerns regarding an accident injury settlement? Are you considering how to structure your personal injury settlement or anticipate a possible garnishment? Concerns like these are one of many reasons you need strong legal counsel by your side during an accident injury claim, so your rights and interests are fully protected.
If you or a loved one got injured because of someone else’s negligence, get in touch with a seasoned personal injury attorney today.