Can Creditors Take Away Your Personal Injury Settlement?
After an accident, the settlement amount you obtain can help you pay for hospital bills and other related expenses. Clients, who owe debts, often wonder if their compensation can be subject to garnishment actions at the hands of creditors. Fortunately, under New York State law, personal injury settlements are partially exempt from the reach of most creditors. In other words, creditors are typically prohibited from seizing settlements to satisfy existing debts.
Protecting Your Compensation
If you declare a Chapter 7 bankruptcy, all non-exempt assets are eligible to be distributed for the payment of creditors in return for discharging unpaid debts. Individuals filing for bankruptcy can choose to apply for either New York State or federal bankruptcy exemptions. Typically, federal exemptions provide more generous guidelines than those within the state. Some important exemptions include: