Can My Minnesota Injury Award Be Garnished?

The average American carries more than $50,000 in debt, so if you earn a payday in a workers’ compensation or personal injury claim, you may be wondering if debt collectors may soon come knocking to collect what they’re owed. Worse yet, you may wonder if they can actually garnish a portion of your injury award to settle past debt. In today’s blog, we take a closer look at who can recoup debt in the wake of a personal injury award, and who cannot touch your money.

Injury Award Garnishment In Minnesota

Garnishment is the legal process by which an entity to whom you owe money can seek to obtain money from your bank account, paycheck or settlement award. The good news is that, as dictated by Minnesota Attorney General Keith Ellison, workers’ compensation and personal injury awards are exempt from being garnished, meaning that debt collectors cannot directly take a portion of your award unless you decide to make that payment on your own.

However, this doesn’t mean that you are free to do with your injury award as you please. While it’s in your best interest to discuss a total take-home amount with your lawyer, it’s important to realize that you may have to pay out a portion of your award to certain parties. Here’s a look at three parties you may be required to pay if you’ve won an injury award.

1. Your Lawyer – This shouldn’t come as a surprise, but it’s worth mentioning. If a lawyer helped to secure your injury award (and we recommend you work with a lawyer because they can often get you a much bigger payday), then you’ll have to settle up with them after your case. In most instances, injury lawyers work on a contingency basis, meaning that they are entitled to a certain percentage of your injury award. This typically ranges from between 20-33%. That may seem like a high percentage, but when you consider all they provide and how much more they can help you collect, oftentimes a lawyer pays for their services and then some. If you work with a lawyer and you win an award, they’ll get a percentage.

2. Medical Liens – As we discussed in this blog, you may have a medical liens placed on your injury award. Medical liens are placed on your award by an insurance provider who has covered part or all of your medical treatment after an injury. For example, let’s say you incurred $10,000 worth of medical bills after a car accident. The insurance company paid $9,000 after you paid a $1,000 deductible. Later, you were awarded $50,000 for your injury claim. The insurance company may place a lien on your award for the portion of medical expenses that they covered. You would be required to pay back $9,000 for the services they provided, but since this never came out of your pocket and it was factored into your injury award, you’re really not losing any money here.

3. Child Support – Finally, it’s worth noting that some lump sum workers’ compensation and personal injury payments may be sequestered in order to satisfy child support obligations. Your award will not be set aside to account for any future support payments you need to make, but you may be required to pay any unsettled obligations or back payments that you owe. This may depend on what type of damages you receive in your award, so if you are concerned about any child support obligations or how an award could affect these, talk to your injury lawyer.

So in short, you’re not going to be forced to pay outstanding debts because you received a compensation award outside of possibly satisfying child support obligations. Your lawyer will take a small portion as a fee for their services, and a health insurance provider may recoup some of the expenses they covered that are factored directly into your award amount, but the rest is yours to support yourself and your family as you see fit. For more information about any of this, or for help with your injury claim, reach out to Dean and the team at Margolis Law Firm today.