If you have received a personal injury or workers’ compensation settlement recently, or will in the near future, you need to take action to protect this money. Your injury settlement monies are “exempt”. This means that a creditor can’t take it from you by a bank garnishment, and, if you file bankruptcy, it means that you can keep all of it – even if your settlement was several thousand dollars. However, there are steps you need to take to receive this protection.
The first step is to keep that money separate from all other money-like wages. If there are judgments against you, the second step is to deposit the money on a prepaid debit card.
The Steffens Law Office wants to help you exempt and protect your settlement monies from creditor garnishment, and from the Bankruptcy Court, but we need your help in doing so.
Keep Your Funds Separate
Deposit your injury settlement check in a segregated account & don't deposit any other money in the account.
You must keep your settlement monies in a segregated, separate bank account. Do not mix up any other money with your settlement monies. This is called “commingling funds” and it removes the “exemption”, or protection, for this money.
If you and your family have income from another source, be certain to keep that money out of the injury settlement account. So, do not deposit one penny into your settlement account unless you can document that the money deposited came from the settlement. In other words, do not deposit a traditional paycheck, or cash from another source, into this account. As long as you can prove that all money in your account is from the injury settlement, you get to keep it when filing bankruptcy, or if a creditor tries to garnish it. You need to have a “paper trail” of copies of the settlement check and deposit statements which show the settlement check was deposited into the account, with no other deposits.
Use a Prepaid Debit Card
If creditors hold judgment against you, deposit the settlement check on to a prepaid debit card, not a normal bank account.
If creditors hold judgments against you, you should deposit your settlement money on a prepaid debit card, not a traditional bank account. A number of our clients have successfully used a prepaid debit card from Wal-Mart or NetSpend. This debit card must be a “prepaid” debit card. It cannot be tied to a bank checking or savings account. While you may pay a monthly fee for this convenience, at least the collection agency likely will not be able to attach and garnish that prepaid debit card. Again, you need to keep a paper trail of the deposits showing that the money on the debit card is only from your injury settlement, with no other deposits onto the prepaid debit card.
Our Experienced Bankrupcy Attorney Is Here To Help
If you have other questions about how to protect your settlement monies and manage your injury settlement account, please contact the lawyers at the Steffens Law Office. We have over 30 years combined experience in the field of debtor/creditor law, and we can help protect your money.