Can my Lawsuit Settlement be Garnished?

Q: Can my Lawsuit Settlement be Garnished?

The good news is that it is unlawful for your creditors to garnish the proceeds of your personal injury claim in most cases. However, you must take certain steps to protect yourself or you could find your recovery tied up in an unnecessary garnishment proceeding. If your creditor has obtained a court judgment against you, they can seek an order from the judge to freeze your bank account and seize their share of the money you have there. If you intermix your settlement funds into your regular bank account, it can be hard to prove what is exempt and what is not. Unless you have a clear paper trail showing that the money in your account comes from a settlement, it could be virtually impossible to get those funds returned to you.

Home > Los Angeles Car Accident Lawyers > Can my Lawsuit Settlement be Garnished?

There are many factors to consider before you bring a personal injury lawsuit. If you are under financial strain prior to your injury, it is understandable to wonder if your creditors can reach any settlement you might obtain. After all, going through the challenges of a personal injury lawsuit only to see the proceeds of your claim taken from you can be discouraging. The good news is that it is unlawful for your creditors to garnish the proceeds of your personal injury claim in most cases. However, you must take certain steps to protect yourself or you could find your recovery tied up in an unnecessary garnishment proceeding.

When you work with a dedicated Los Angeles car accident lawyer from Ellis Injury Law, you get more than an attorney that files your documents and deposes your witnesses. You get a compassionate counselor that can ensure you keep your hard-earned compensation after a successful injury claim.

Garnishment exemptions in California

Under California law, certain assets are exempt from garnishment. This means that your creditors may not legally file paperwork to remove those assets from your bank account to satisfy your debt. The garnishment process can be complicated however and missteps on your part could result in confusion that causes the bank to treat your settlement money as if it were not exempt. While there are avenues to release these garnishments, dealing with this challenge is time and money out of your pocket that could have been avoided.

Generally speaking, state law will only allow a creditor to garnish no more than 25 percent of your disposable income. This is the money you have leftover after you subtract your cost of living. Alternatively, they may not take anymore than 40 times the hourly minimum wage if that amount is lower.

If your creditor has obtained a court judgment against you, they can seek an order from the judge to freeze your bank account and seize their share of the money you have there. If you intermix your settlement funds into your regular bank account, it can be hard to prove what is exempt and what is not. Unless you have a clear paper trail showing that the money in your account comes from a settlement, it could be virtually impossible to get those funds returned to you.

Protecting your injury settlement from garnishment

When you work with Los Angeles car accident lawyers, they can guide you on how best to protect your settlement check. Some of the important steps to take in order to protect your settlement money include:

Keeping your settlement money separate. This means bank accounts separate from any checking, savings, or retirement accounts you might have. If the only money in the account is from your settlement, it is easy to show the court it should not be garnished.
Keep records. Maintain a careful paper trail of every dollar you receive. By keeping thorough records, you can easily trace the money from the defendant to your bank account.
Consider prepaid debit cards. If you are dealing with aggressive creditors, any bank account could become unsafe from hassle. Prepaid debit cards could make sense for you in that situation.
Discuss your liens with your attorney. For many people dealing with a personal injury case, their debt stems from the medical treatment required by the accident. Experienced Los Angeles car accident attorneys can help you negotiate your liens during the settlement process. This can protect you from aggressive collection efforts in the future.

Speak with Ellis Injury Law right away

At Ellis Injury Law, we know that our role as legal counsel goes beyond filing lawsuits and negotiating settlements. We are prepared to guide you every step of the way to help you not only get the compensation you are entitled to but help you keep it as well.

If you are concerned about creditors reaching your settlement money, we can assist you in negotiating your healthcare liens during the course of your claim. Should you have questions about getting the most out of your claim, we look forward to hearing from you. Schedule a free consultation with Ellis Injury Law right away to get started.