Yes, in Maine, some creditors may be entitled to a portion of your personal injury settlement funds. Which creditors have a valid claim and how much you must pay them depends on the types of debt in question. For example, if you have medical liens placed against any potential settlement amount, then you’re required to use your settlement money to pay those medical expenses. There are other types of debt that you may have to use your award to settle, too.
If you don’t know how to protect your settlement and need to preserve that money for your future needs, our Maine personal injury lawyers can help explain the legal options available.
If I owe money, can creditors take my personal injury settlement?
Maybe. If your creditor is a medical care provider who provided your personal injury-related care, then yes, those medical bills should be repaid from your settlement because medical bills are usually part of the settlement amount. However, your settlement isn’t a free-for-all for any creditor that comes knocking. For example, if you owe a personal loan to someone or have credit card debt, the award from your personal injury lawsuit won’t automatically go towards collection attempts from creditors.
Maine state law sets certain exemptions for garnishment of personal injury settlements and caps on the amount of an individual’s disposable income permitted to be garnished as payment for a debt. Furthermore, these statutes require the creditor to take affirmative legal action to prove that you have defaulted on the debt or are delinquent in payments.
There are specific exceptions, however. Let’s take a look at some of them.
When a monetary award from a personal injury case can be garnished
Most garnishments require a court order to seize funds, and again, not all debts are eligible. The ones that are include:
Child support obligations
Maine courts are strict about parents who fall behind on their ordered child support payments. If you have unpaid child support, your child’s other parent can file a petition for payment of the past-due amount.
If your settlement is substantial and you received a large amount of non-economic damages (like those awarded for pain and suffering and loss of enjoyment of life), then your child’s other parent may file a petition to revise your child support obligations. If a family law judge determines that your personal injury settlement will lead to a substantial change in your economic situation, then you may be ordered to pay more in child support. However, this is a family law matter, and one that you should discuss with a family law attorney.
Money you owe the government
If you owe back taxes, federal student loans, or other fines to a government agency, then the agency you owe may be able to garnish any settlement you receive from your personal injury claim.
For example, the IRS has the power to garnish your paycheck, pull money from your bank accounts, and take the money you owe to repay your back taxes. And it’s not the only government revenue agency with these powers. If you owe state income tax to the state of Maine or local taxes, then these revenue agencies may also be able to garnish your settlements.
Repaying medical expenses
If you receive Medicaid or Medicare and your personal injury-related medical care was covered by your government funded health insurance, you are required to repay them for the money they paid towards your related medical bills. Make sure to inform your attorney if you receive government health benefits, such as Medicaid or Medicare because federal law requires that these programs be repaid.
Protecting your personal injury settlement from creditors
Worried creditors might try to claim your personal injury settlement? Understanding your rights is crucial to protecting your compensation. The experienced team at Shaheen & Gordon can help you navigate these challenges and pursue the compensation you deserve. If you need assistance with your personal injury claim, call Shaheen & Gordon today at (800) 451-1002 or contact us online for a free consultation.
