Yes, under New Hampshire law, a personal injury settlement can be garnished to pay certain debts, such as child support or back taxes, but not all creditors are allowed to take settlement funds. Garnishment generally requires a court order and applies only in limited situations. If you are concerned about protecting settlement money from a personal injury case, talk to an experienced Manchester, NH personal injury lawyer about your options.
What is garnishment?
Garnishment is the legal process for collecting a debt. If a creditor is unsuccessful in getting payment from you, they can petition the court for a monetary judgment against you. For example, if you owe money to your child’s other parent for child support, the state’s Child Support Enforcement can put a lien on your personal injury settlement.
How can you protect a personal injury settlement from garnishment?
Not all creditors can take a portion of your personal injury settlement. If you have credit card debt, for example, the credit card company cannot garnish your personal injury settlement. And, if you’re not behind on your payments, no matter who the creditor is or how much you owe, the creditor cannot seize your settlement to pay the balance of the debt.
New Hampshire law permits certain creditors to garnish wages and personal injury settlements:
- Unpaid child support and alimony
- Unpaid state (any state, if you lived somewhere else and owe money) and federal income taxes
- Certain student loan debts, after proper court proceedings
- Court-ordered money judgments, after a creditor obtains a judgment and court approval
How can you protect a personal injury settlement from garnishment?
You have the right to challenge the garnishment of a personal injury settlement. A personal injury attorney can explain how to start this process and what evidence the court will review. In New Hampshire, the court considers both your financial needs and the creditor’s claim when deciding whether garnishment is allowed.
For example, the court may consider whether you have significant medical bills or medical liens tied to the settlement. If you need ongoing medical care and the settlement includes funds meant to cover that treatment, the judge may limit or deny garnishment.
There are also practical steps that may help protect settlement funds:
- Keep settlement funds separate by depositing them into a dedicated bank account.
- Maintain clear records showing how the money is used, including payments for medical care and legal fees.
- Consider a settlement protection trust in New Hampshire when appropriate.
With a settlement protection trust, the settlement funds are managed by a trustee and distributed under specific terms. This structure limits direct access to the money and may help reduce creditor access in certain situations, depending on the debt and court order.
In some cases, a portion of personal injury settlement funds may be exempt from garnishment, based on the type of debt involved and the court’s ruling.
When should you talk to a personal injury lawyer about garnishment?
The legal team at Shaheen & Gordon works with you through each stage of a personal injury case. We can help you protect your personal injury settlement, and may be able to negotiate an acceptable repayment plan for your creditors. Contact us online or call us at (800) 451-1002 to request a free personal injury consultation.
