Perhaps you were recently injured in an accident, like a car wreck or workplace injury, and were forced to use your credit cards to pay your bills until your settlement check arrived.
A common question many of our clients ask us is how their personal injury award may affect any credit card debt. For example, many want to know if the money can be used to pay credit card debt, or if the credit card company can garnish the settlement which would leave them without the means to continue with necessary treatment.
Continue reading to learn more about protecting your settlement and using it in a way that benefits you.
Credit card debt and personal injury settlements: what you need to know
Credit card companies have many options for collecting the funds owed to them. Most commonly, they call regularly, they might offer payment plans, and most often they send a delinquent account to collections. In instances where the creditor has successfully sued the user, they may garnish their wages or bank account to satisfy the judgment.
Fortunately, there’s good news for Florida residents: in many cases, credit card companies cannot garnish a personal injury settlement.
If you’re currently on your credit card payments but still have an outstanding balance, then the credit card company can’t demand payment in full after you receive a personal injury settlement, nor can they garnish the debt from your settlement.
An exception to this is if you received a structured settlement such as the purchase of an annuity contract for all or part of the settlement, and the annuity was created for the benefit of that creditor. If the creditor has successfully sued you, then they may be able to levy some of the funds from your bank account, however, the garnishment might be limited to the portion of your settlement that was for property damage.
How can I keep a credit card company from seizing my personal injury settlement?
If you’re concerned about a creditor garnishing your settlement, you might be able to utilize a trust to preserve those funds for their intended use (i.e., medical care, modifications to your home to accommodate a disability, etc.).
Although it’s often recommended that your settlement be placed in an account separate from your other assets and income, if the money is in a regular checking or savings account, it can still be garnished or seized to satisfy a judgment. A trust is different because it offers more legal protection than a bank account and is safe from creditors or liens.
Protecting your settlement is important and can become complicated, so it’s in your best interest to consult with a Florida personal injury lawyer right away.
Other considerations about debts and personal injury settlements in Florida
Although your personal injury settlement might be protected from a credit card company absent a few exceptions, you might have other obligations for which you must use your settlement proceeds.
For example, if you received medical treatment on a lien, that lien was put on your settlement, so the medical providers will need to be paid from your settlement before the funds are disbursed to you.
If you have outstanding medical bills for treatment that wasn’t provided on a lien, you should also use those funds to pay your doctors and medical providers.
Do you need help after being injured in an accident?
If you’ve been hurt in an accident caused by another party’s negligence, you have the right to seek compensatory damages to cover your medical care and other losses. The experienced Florida personal injury lawyers with Lytal, Reiter, Smith, Ivey & Fronrath might be able to help. Call (561) 655-1990 to schedule a free consultation to learn about your rights and options.
