How To Safeguard Funds Received As Personal Injury Settlement

If an injured accident victim must deal with a long recovery, that usually means spending many weeks away from the workplace. The absence of a salary could lead to a pile up of unpaid bills. After the awarding of a deserved compensation package, the recovered victim could start to hear from bill collectors.

What funds might be garnished?

Funds from the settlement could be garnished, if the recovered victim owed money for child support. By the same token, money could be taken from the awarded compensation package, if the recovered victim’s federal or state taxes had not been paid on a regular basis.

Creditors do not have a legal right to go after the money received by a claimant that has settled a dispute with a defendant’s insurance company.

Legally, creditors do not have the right to take such an action. Still, some of them may try to get hold of funds received by a recovered debtor/claimant.

Means for safeguarding cash from debt collectors

Do not put money from a settlement in the same bank account as all your other cash. Instead, open a separate account for the money that was either awarded by the insurance company, or granted by the court.

Accident Lawyer in Waterloo asks you to keep a copy of the settlement agreement. Also keep a record or your deposits, and save your receipts, if you spend money from the separate account. Then study your statements, and see if they match with your recorded deposits and your saved receipts.

Understand that this safeguard does not put an end to the calls from bill collectors. Consider setting up a payment schedule with creditors.

The possible alternative to a bank account

A claimant that has settled with an insurance company does not have to place each awarded dollar in a bank account. That cash could be used to finance a prepaid debit or credit card. Debt collectors would find it impossible to obtain the cash that was used to finance such a card.

In this case, the safeguarding of funds comes at a sacrifice. The company issuing the card could charge a fee. While a bank might also charge a fee, it would certainly be less than the fee charged by a card-issuing company.

In addition, you could face restrictions, regarding when and how you are able to add to the funds that backup the pre-paid debit or credit card. Such restrictions reflect the fact that the card has already been paid for. It pays to go along with such restrictions, so that you can end worries about the garnishment of funds that were supposed to get you back to where you were, before you had the misfortune of being injured in an accident.