Are you one of the many people who received a personal injury settlement in Brainerd, MN this year? Do you pay child support? If the answer to both of these questions is yes, you may be wondering: can a court deduct child support from a personal injury settlement in Brainerd?
The only time child support could take away your personal injury settlement money is if that settlement can be considered income. A child support lawyer who also understands personal injury settlements can help you determine if your recovered damages are income or not.
We also want to lend you a hand in knowing what to expect. That’s why we created this guide. Learn more about personal injury settlements in Brainerd and child support payments below, and stick around to find out where to find the best child support attorney in Brainerd, Minnesota.
When Is a Settlement Considered Personal Income?
Not all personal injury settlements are the same.
Some settlements, called compensatory settlements, pay back the plaintiff for any expenses incurred due to the accident. These expenses may include your medical bills, property loss, or compensation for pain and suffering.
Other settlements are non-compensatory, also known as punitive settlements. These settlements don’t pay anything back and are typically awarded on top of the compensatory settlement.
A settlement isn’t considered gross personal income if it’s intended to repay the injured party’s medical bills or recover money lost to property damage. Most other types of personal injury settlements may be considered personal income in Minnesota.
Exactly which settlements does Minnesota consider personal income and, therefore, leverageable for child support payments? We’re talking about three of them next.
A plaintiff can pay out a settlement in two different ways: via a lump sum or regular payments. You need to know which type of settlement you’re receiving to know if it counts as income or not.
In general, the state of Minnesota wouldn’t consider a lump sum settlement income. When a victim receives his or her settlement as monthly payments or otherwise regular installments, Minnesota may consider the payments as income.
Settlements paid in installments may accrue interest. While child support may be able to leverage the payments themselves, any interest accrued isn’t considered income.
The best way to know for sure if your settlement payments are personal income is to call a child support attorney near you.
Did you miss work while you were recovering from your injury? Did you receive a settlement to compensate you for the wages you lost from not working? If the answer to both of these questions is yes, your settlement may be considered personal income.
Why? When a court designates a portion of your settlement for lost wages, it intends for that amount to replace your lost income. That means the settlement is as good as your regular income.
Keep in mind that the judge must explicitly set aside a portion of the settlement to compensate for your lost wages. If the judge doesn’t do this, your personal injury award likely won’t count as income.
Again, the best way to know for sure if child support can take your settlement for lost wages is to call a local family lawyer.
So far, we’ve only talked about compensatory damages. Judges award compensatory damages to make up for financial losses to the injured party due to the accident.
But compensatory damages aren’t the only type of personal injury settlement. In some rare cases, judges may order the defendant to pay punitive damages. The goal of punitive damages is to punish the defendant for his or her actions, not to repay the plaintiff.
Did a judge order the defendant to pay punitive damages in your personal injury case? If so, that portion of your settlement may qualify as income.
Additional Factors Affecting Child Support Payments from Settlements
Whether child support can leverage your personal injury settlement doesn’t just depend on if it counts as income or not. Minnesota child support laws also dictate a few factors affecting personal injury settlements.
Keep reading to learn more.
You Owe Child Support
If you owe child support in Minnesota, the amount owed can be legally deducted from your personal injury settlement. However, this is only the case if your settlement is a lump sum of $500 or more.
In Minnesota, child support is determined by the amount of time you spend with your child. If your visitation rights have changed since you received your personal injury settlement, child support may not be able to take money from your settlement.
The Child’s Needs
The number one factor in determining child support payments in Minnesota is your child’s need.
For example, imagine that you’re unable to pay child support due to a personal injury, and you receive a settlement award. If your inability to pay child support negatively impacts your child’s quality of life, you may have to forfeit some of your settlement.
A Minnesota Family Lawyer Can Change Your Child Support Arrangement
Being unable to work due to an injury can affect your personal income. The Minnesota Department of Human Services requires you to contact their office if you lose, change, or get a new job.
Yet, regardless of how much money you’re bringing in, you still have to meet your child support obligations. Even if you’re injured and unable to work, you must pay child support.
The only exception to this rule is if you hire a Minnesota child support lawyer to help you change your child support arrangement. Your attorney will first have to prove one of the following:
- You experienced a substantial decrease in income, substantial meaning approximately a 20% decrease in income
- Your child has experienced a substantial decrease in his or her monthly cost of living
- Your child has experienced a substantial decrease in childcare costs
- Your child emancipated
In these cases, an experienced child support attorney can request that a judge grant you a temporary modification. This will allow you to pay a smaller monthly amount or put your child support payments on pause altogether.
The Consequences of Not Paying Child Support in Brainerd
If you owe child support and get a personal injury settlement in Brainerd, the good news is that the amount will be automatically taken from your lump sum. But what happens if you forget or don’t want to pay the child support you owe?
Here are the consequences of not paying child support.
Deducting Child Support from Your Tax Return
Are you owed a refund from your federal or state income taxes or property taxes? Failing to pay child support means the state of Minnesota could deduct what you owe from your tax refund.
Rejecting Student Loan Applications
Are you planning to apply to college or a university? Do you want to apply for grants to cover your tuition? If you owe child support, schools have the right to deny your application for student grants.
When you owe child support, the money you owe is called arrears. And if you have arrears, Minnesota could apply interest to the amount you owe. That means you’ll have to pay the child support you owe, plus any interest that accrued on payments in arrears.
Credit Score Hit
Owing child support is similar to having any debt. How so? Your child support debt can be submitted to national credit reporting agencies, which could then negatively impact your credit.
Having poor credit can wreak havoc on your life, from making it difficult to find housing to being ineligible for loans and lines of credit.
Passports and Licenses
Owing child support money can also impact your ability to get a passport. Not paying child support can also mean you won’t be able to get certain licenses renewed or even have them suspended. This includes the following licenses:
- Driver’s license
- Occupational license
- Recreational license
Don’t want to deal with these consequences of not paying child support? Then you need to call a child support attorney ASAP.
Can Child Support Take Your Worker’s Compensation?
A related question here is regarding worker’s compensation. If you were injured at work, you might receive not only a personal injury settlement but also a worker’s compensation check. Child support can also take money from your worker’s compensation.
Child support treats worker’s compensation like it does regular income. The only difference is that the amount you have to pay out from your compensation is less than your regular payments. The exact amount you’ll have to pay depends on whether you’re on:
- Temporary total disability benefits
- Temporary partial disability benefits
- Permanent total disability benefits
As with personal injury settlement in Brainerd, a child support attorney can help you determine what you’ll owe before you owe it. And, in some cases, your child support lawyer may also be able to help you get your child support payments suspended until you’re feeling better.
Call a Brainerd, Minnesota Child Support Lawyer
Child support could deduct money from your personal injury settlement if it’s considered personal income. Other factors affecting whether settlement funds are leverageable for child support include whether you have any amount in arrears and what’s best for your child.
You don’t want to deal with the consequences of owing child support in Brainerd, Minnesota. That’s why you need the best child support lawyer around. Call Carlson & Jones today for a free consultation with our experienced family lawyers.