One question that personal injury lawyers in Cincinnati get is, “Can personal injury settlements be garnished?” Federal and state laws do offer some protections to injured people. For example, medical providers and government agencies may be able to place liens, not garnishments, on a settlement, while private creditors may have an uphill battle to garnishing money.
Fear of garnishment can prevent people who qualify for compensation from seeking it. Getting legal advice can clarify your situation and offer peace of mind, so call Young, Reverman & Bolotin at 513-400-0000.
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Understanding Garnishment Laws for Personal Injury Settlements in Ohio
Garnishment occurs when creditors, such as medical providers, government agencies, retailers, banks, utility companies, and credit card companies, collect on money debtors owe them. They directly take some of the debtor’s wages, bank accounts, or other assets. Both state and federal regulations determine the types of funds a creditor can garnish, and how much.
There is no automatic garnishment for personal injury settlement money. After all, such settlements are meant to be compensation for medical expenses, pain and suffering, lost income, property damage, and other damages. Settlement money is not regular income.
However, some creditors can try to place liens on the money or get settlements garnished. Chances increase if the injured person deposited the settlement money in a general bank account, mixing it with other money.
If you receive a settlement, you can protect it by opening a bank account just for the settlement funds. Avoid depositing other types of funds into the new account. This strategy helps you argue with more credibility that the funds should be exempt from garnishment. It also helps to talk with your personal injury lawyer as soon as possible if creditors threaten garnishment. Your lawyer can challenge the garnishment and claim exemptions.
Which Creditors Can Garnish Your Personal Injury Settlement in Ohio?
Some creditors, such as medical providers, have more authority or ability than others to lay claim to personal injury settlement money. They usually do this through liens.
Medical Providers
Personal injuries often incur medical expenses, and people struggle to pay these bills. The medical providers owed money, or their collectors, might place medical liens on settlements during the claims process. The liens let these medical providers be paid directly from the settlement proceeds, which is different from garnishment.
Health Insurance Companies, Medicaid, and Medicare
Medicaid and Medicare can seek settlement liens to cover expenses. Likewise, your insurance company might cover your medical expenses upfront but still seek reimbursement from a settlement. This is because the company does not want to pay for treatment that a negligent party’s insurance company might cover. Ohio law allows health insurance companies to pursue this type of repayment.
Government Agencies
The IRS, Ohio Department of Taxation, Ohio Child Support Enforcement Agency, city governments such as Cincinnati’s, and the Ohio Attorney General’s Office are among the government entities with the legal authority to pursue some of your personal injury settlement money.
For example, if you owe child support, a lien could be placed on the settlement. Your lawyer will be aware of all liens, and they usually get resolved when the settlement occurs. They are paid before any compensation goes to you. You get what is left after these liens and attorney’s fees.
Private Creditors
Private creditors such as credit card companies and lenders typically must get a court judgment to garnish personal injury settlements. Even then, exemptions such as pain and suffering compensation being off limits may limit their access to these funds.
Garnishment Exemptions in Cincinnati
In Ohio, federal law safeguards Social Security benefits, veterans’ benefits, and certain types of retirement accounts from garnishment. State laws also help protect personal injury settlements that meet specific criteria.
What is strict liability? This applies when a party is held responsible for damages regardless of intent or negligence. It can mean more compensation for injured people, but does not necessarily protect more of the settlement from liens or garnishment. Your lawyer can clarify the nuances in your situation.
How to Protect Your Personal Injury Settlement From Garnishment
Proactive planning can help protect your personal injury settlement from garnishment.
Claim Exemptions
Compensation for medical expenses, future medical care or rehabilitation, and pain and suffering usually are exemptions from garnishment. A homestead exemption may apply, too, if you use some settlement money to buy or take care of your primary residence. In Cincinnati, the median monthly amount of homeowner costs with a mortgage is $1,578, and $650 without.
Your lawyer may be able to identify other exemptions that cover the necessities of life and other expenses.
Separate the Settlement Funds
Keep the settlement money separate from your other funds in an isolated account to have the best chance of qualifying for exemptions. If you commingle settlement funds with income or other funds, you have a harder time proving the money should be exempt from garnishment.
Negotiate With Creditors
Sometimes, negotiation paves the way to payment plans or lump-sum settlements with creditors that avoid garnishment. You can preserve more of your money and avoid other potential disadvantages of garnishment, such as a negative effect on your credit score, stress, and less financial stability.
Avoid Common Mistakes
Some people try to protect their settlement money, for example, by moving the funds to a friend’s bank account. This could be fraud and backfire. Your legal complications could multiply. Stick with legitimate methods to protect your settlement money.
A lawyer can help in various ways. Can you pay your injury lawyer by the hour? This usually does not happen, since most personal injury lawyers work on a contingency fee basis. However, hourly rates may be available for specific services, such as post-settlement consultations on garnishments.
Another reason to see a lawyer may be to get an answer for, “Can a personal injury claim be reopened?” After settlement, personal injury claims usually cannot be reopened. Fraud, newly found evidence, or certain mistakes may be enough to reopen a case, though.
Contact us today at Young, Reverman & Bolotin about your personal injury case and your wage garnishment concerns.
