After suffering a serious injury, receiving a personal injury settlement can provide much-needed financial relief. A settlement may help cover medical expenses, lost wages, rehabilitation, and other losses caused by an accident. But what happens if you owe child support or have an existing alimony obligation? Can your injury settlement be taken for child support or spousal maintenance?
The answer depends on several factors, including whether you owe child support arrearages, the terms of any existing court orders, and the circumstances surrounding your injury settlement.
The short answer to whether money from a personal injury settlement can be taken for child support is yes. In Indiana, unpaid child support can be collected through a number of enforcement methods, including the interception of certain insurance settlements. The Indiana Department of Child Services specifically identifies insurance settlements as one of the tools available to collect delinquent child support.
This means that if you have significant child support arrearages, you should not assume that your entire settlement will automatically be paid directly to you.
For example, imagine that you are owed a $100,000 personal injury settlement but have a substantial child support arrearage. Depending on the circumstances and applicable withholding or collection procedures, some of the settlement may be used to satisfy the outstanding child support obligation.
Child support obligations can also affect the amount of support owed going forward. Indiana’s Child Support Guidelines use the parents’ income and financial circumstances to determine support obligations, so a significant change in financial circumstances may raise questions about whether a modification is appropriate.
Serious injuries can make it difficult or impossible to work, which can make it harder to keep up with financial obligations. However, falling behind on child support generally does not make the obligation disappear. Indiana DCS explains that even when a current child support obligation terminates, any existing arrearage remains owed.
If you have both a personal injury claim and outstanding child support, it is important to address the two issues together, and this can be done through your settlement recovery. Your personal injury attorney may need to coordinate with your family law attorney or other professionals to determine how the settlement may be affected.
Indiana does not use the term “alimony” in the same way some other states do. Indiana generally refers to spousal maintenance, which can be awarded in limited circumstances, including certain situations involving disability, caregiving for a disabled child, or rehabilitative needs. Parties may also agree to maintenance provisions as part of a settlement agreement. A personal injury settlement can raise complicated questions when a person is married, going through a divorce, or already subject to a spousal maintenance order.
Whether settlement proceeds are considered marital property can depend on factors such as when the injury occurred, when the settlement was received, what the settlement compensates the injured person for, whether the proceeds have been commingled with marital assets, and if spousal support is owed. For that reason, it is important not to assume that an injury settlement is automatically separate property, or automatically marital property.
If your injury occurred during the marriage, the settlement may raise questions about marital property and the division of assets during a divorce. The nature of the settlement can also matter. A settlement may compensate an injured person for different types of losses, such as medical expenses, lost wages, or pain and suffering. How those proceeds are characterized can become important in a divorce proceeding.
Indiana courts distinguish between property division and spousal maintenance, and the rules governing each are different. Because these issues can overlap personal injury law and family law, anyone facing both a personal injury claim and a divorce should obtain advice about both areas before distributing or transferring settlement proceeds to cover spousal maintenance costs.
This issue of whether a personal injury settlement can be used for child support or spousal maintenance can work in both directions. If your former spouse or the other parent of your child receives a substantial personal injury settlement, that settlement may potentially become relevant to financial issues in an appropriate family-law proceeding.
However, a settlement does not automatically result in a reduction or elimination of someone else’s child support or maintenance obligation. Any modification generally depends on the applicable law, the existing court orders, and the parties’ current financial circumstances.
It is important not to assume that medical expenses will automatically be paid first in every situation. A personal injury settlement may have several competing claims against it, including attorney fees, litigation expenses, medical liens, health-insurance reimbursement claims, child support obligations, spousal support, and other valid liens or claims.
The order and priority of those claims can depend on the specific circumstances and applicable law. Attorney Caleb Fleschner of Fleschner, Stark, Tanoos & Newlin explains:
“A personal injury settlement is intended to help an injured person recover from the financial and personal consequences of an accident, but there may be other legal claims against those funds. If you owe child support or are involved in a divorce, it is important to address those issues before the settlement is finalized so there are no surprises.”
If you have an existing child support or spousal maintenance obligation and are pursuing a personal injury claim, let your attorney know as early as possible so you know how these concerns may affect your settlement. Your attorney can help identify potential liens and claims against the settlement and explain how those issues may affect the amount you ultimately receive.
You should also consider consulting a family-law attorney if your settlement could affect an existing divorce decree, child support order, or maintenance agreement. Personal injury and family-law issues can overlap, and addressing both before a settlement is finalized may help prevent complications later.
Receiving a personal injury settlement can be an important step toward rebuilding your life after an accident. But if you owe child support, are subject to a spousal maintenance order, or are involved in a divorce, there may be additional considerations that affect your settlement. If you are still seeking answers to whether your injury settlement can be taken for child support or spousal maintenance, we can help.
The Indiana personal injury attorneys at Fleschner, Stark, Tanoos & Newlin can review your injury claim, identify potential issues that could affect your settlement, and help you understand your legal options. If you have been injured because of someone else’s negligence, contact our firm today to discuss your case and learn more about your rights.
Fleschner, Stark, Tanoos & Newlin
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The financial burden that often comes with a serious injury can be too much for many people to bear. Unexpected medical debt, damaged personal property, and the sudden loss of income can impact the budgets of most families. The good news is that a successful injury claim could help reduce that financial strain after a serious accident. Get in touch with a Terre Haute personal injury lawyer with Fleschner, Stark, Tanoos & Newlin to learn more.
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