Receiving an injury award can be a crucial step toward financial recovery after a significant accident. These awards often cover medical expenses, lost wages, and other damages due to an injury. However, the process can become complex when creditors attempt to claim a portion of your settlement. Understanding when and how creditors can take a share of your injury award is essential to protecting your financial interests. 

What Is an Injury Award?

An injury award, often referred to as a personal injury settlement, is financial compensation awarded to an individual who has suffered harm due to another party’s negligence or wrongful conduct. This compensation aims to cover various damages, including:

• Medical bills
• Lost income
• Pain and suffering
• Other related costs

Can Creditors Claim Your Injury Award?

Creditors may have the right to claim a portion of your injury award under certain circumstances. There are protections against creditors claiming personal injury awards that generally ensure victims can cover their immediate and long-term needs resulting from the injury. However, exceptions exist, and understanding these exceptions is crucial.

Types of Creditors Who May Have a Claim

While personal injury awards are meant to help you recover financially, certain creditors may have a legal right to claim a portion of your settlement.

Medical Providers

If you receive medical treatment and the provider agrees to take their payment from the settlement, they have a legal right to that portion of your award.

Government Agencies

Agencies, such as Medicaid or Medicare, that covered your medical expenses may seek reimbursement from your settlement.

Child Support Obligations

If you have outstanding child support obligations, the court may deduct these amounts from your injury award.

Bankruptcy Trustees

If you declared bankruptcy before receiving the award, the bankruptcy trustee might have a claim to the settlement to pay off your creditors.

How Can Creditors Access Your Injury Award?

Creditors cannot directly access your injury award without following due legal process. Typically, they must obtain a court order or judgment to claim a portion of your settlement. For example, if a creditor has a valid lien or garnishment order, they can present it to your attorney or the insurance company handling the settlement.

Protecting Your Injury Award

Taking proactive steps to safeguard your injury award can help you retain as much of your compensation as possible while meeting any legal obligations.

Understand Your Obligations

Knowing your outstanding debts and legal obligations can help you prepare for potential claims against your award.

Negotiate With Creditors

In some cases, you can negotiate with creditors to reduce the amount they claim or arrange a payment plan.

Consult With an Attorney

An attorney can help you understand your rights and protect your award from unwarranted claims. They can also assist in negotiating with creditors and ensuring that only legitimate claims receive payment.

Steps To Take After Receiving Your Award

Once you receive your injury award, it’s essential to manage it wisely to cover immediate expenses and secure your financial future.

Pay Off Liens

Address any medical liens or other legal claims promptly to avoid complications

Prioritize Essential Expenses

Use your award to cover essential expenses related to your recovery, such as ongoing medical care and rehabilitation.

Plan for the Future

Consider setting aside a portion of your award for future needs, including long-term medical care or rehabilitation.

Contact an Attorney To Protect Your Injury Award

Navigating the complexities of injury awards and creditor claims can be overwhelming. At Lowenthal & Abrams, Injury Attorneys, our knowledgeable attorneys dedicate themselves to protecting your financial recovery. We understand the nuances of personal injury settlements and creditor laws and commit ourselves to ensuring you retain the compensation you deserve.

For personalized advice and assistance with protecting your injury award from creditors, contact us. Our legal team is here to help you understand your rights and secure your financial future. Schedule a free consultation with one of our lawyers today to discuss your case and learn more about your options.