CAN A CREDITOR GARNISH MY PERSONAL INJURY SETTLEMENT IN CALIFORNIA?
Posted on Wednesday, October 31st, 2018 at 7:17 am
Who has access to the money you receive from a personal injury settlement? You received the money for an injury. Therefore, no one should be able to take your money. You would assume this statement is true, but it is not true in all cases. However, there are some instances in which a creditor might be permitted to garnish a personal injury settlement.
You need to take steps to protect your personal injury settlement from creditors. Our Sacramento personal injury attorneys can help you take steps to protect the money you receive for an accident claim.
Hospitals, Medical Providers, and Health Insurance Companies
If you owe money to doctors or the hospital for treatment for injuries sustained in the accident, those bills must be paid from the proceeds of your settlement. Under some circumstances, a medical provider may agree to accept a lower amount to settle the medical lien.
In addition, if your health insurance provider, including Medicaid or Medicare, paid medical bills related to the accident, the provider is entitled to reimbursement of those funds from your settlement. As with the medical providers, there are some instances in which an insurance provider may agree to accept a lesser amount to satisfy is subrogation rights. Therefore, these “creditors” may receive some of your settlement funds.
Other Creditors and Personal Injury Settlements
If a creditor files a lawsuit and obtains a judgment, the court may issue an order to garnish assets. Under California laws, money received from a personal injury settlement is exempt from garnishment by general creditors. However, if you do not keep those funds separate from all other money, the creditor could gain access to the funds.
For instance, if you deposit the personal injury settlement check into your bank account, the funds become commingled with other funds. You continue to deposit funds into the account and use the account to pay bills. If the creditor discovers the account, the court could issue an order granting the creditor permission to garnish the account.
Therefore, before cashing a check for a personal injury settlement, talk to your Sacramento personal injury attorney about ways that you can protect that money from creditors.
Protect Your Injury Settlement Proceeds From Garnishment
One way you can protect your personal injury settlement is to open a new bank account for your settlement money. However, you need to keep the settlement funds separate from any other funds you may have now or may receive in the future. Do not deposit any other funds in that account from any other sources.
If you have an existing judgment against you, you should tell your attorney immediately. Your attorney can help you take additional steps to protect your settlement funds from a creditor. Even though personal injury settlements are normally not subject to garnishment, that could change if you are not careful. If you even think garnishment or collection actions could be an issue, tell your attorney.