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Can Workers Compensation or Injury Settlements Be Garnished Due to Debt?

On Behalf of | Sep 10, 2018 | Workers' Compensation

If you were hurt at work, workers compensation and injury settlements can help ease the financial strain of your medical bills. However, if you already had many other debts, can the money you receive for your injury in order to cover wage loss and medical bills be garnished? The good news is probably not. However, while your workers compensation may be safe, that doesn’t mean all injury settlements are safe.

While you would likely happily pay everyone if you had the money, the problem is that you don’t have any money to spare. The problem is that worker’s compensation may seem like extra money to you, and we all know what creditors like to do when you have extra funds lying around. However, an injury at work can make money even tighter and even if you get a sizable settlement from worker’s compensation, it is reasonable to worry that your debt collectors will come calling and looking to take a piece of that money that you need for medical bills and generally just need for living.

If you are earning a regular income, then your creditors can garnish up to 25 percent of that depending on the state and federal laws that regulate it. However, thankfully worker’s compensation is not regular income even if it does cover lost wages. Workers compensation exists to minimize employee lawsuits as well as to protect the employer and employee alike from getting taken advantage of, as such, they are protected from wage garnishment.

There is one unfortunate bit, though. If you file an injury suit against someone other than your employer, such as the manufacturer of a defective product that resulted in your injury, those injury settlements are subject to creditors’ liens. This means that your worker’s compensation may be safe, but if you pursue any other lawsuits outside of your employer, even if you intend to use that settlement to pay down some of your debts, they may already have dibs on it. This also applies to child and spousal support. Thankfully since worker’s compensation doesn’t count as regular income, child support or spousal support cannot be deducted from it even if you are on temporary disability and not earning any weekly wages. However, you will need to resume payments once you return to work.

Between lawyer fees and your creditors, you may not have any settlement left after your case, and in those cases, it may be better not to pursue the case at all. However, that is completely up to your discretion since it will pay down at least some of your debt, but you may be going through the trouble of a case for no reward for yourself. Essentially you are going through the trouble of filing the suit, but not getting any of the financial reward that you are seeking, which can make it seem pointless, but it is likely going to drive your debt down significantly, so in that regard, it may be worth pursuing.

While your worker’s compensation may be safe from garnishment from creditors and spousal or child support, whether you pursue other injury settlements or just need to sort your worker’s compensation out, you will need a skilled lawyer by your side. The advice of a knowledgeable attorney when providing guidance in legal matters can be invaluable. If you need some consultation on whether they decision you are making is the right one as well as someone to represent you throughout all your legal pursuits, contact us today. The Law Office of Joshua Borken is dedicated to fighting for the rights of Minnesota’s injured workers, whether they have a large mountain of debt or not.