Child support is a tricky situation that can have far-reaching effects on other areas of your life and the law. If you were injured and need a personal injury case to pay for your damages, then getting a settlement might have a few different effects on your child support. However, this all depends on what the settlement looks like and what’s going on in your child support case.
A personal injury settlement can have parts of the settlement taken into account in your child support calculations as “income.” Whether you get a lump sum or annuity can affect this, too. An injury case can also affect your income going forward, potentially justifying a modification. Additionally, parts of your settlement could be seized if you are behind on child support.
For help with an injury case, call the New York personal injury lawyers at The Carrion Law Firm by dialing (718) 841-0083.
How Does Child Support Take Income into Consideration?
Child support calculations usually look at your gross income, then subtract out your mandatory expenses (like rent and taxes) before determining what net income they can put into the calculation. From there, they compare your income to the other parent’s to see who pays which share of the support obligation, and they look at certain percentages based on how many children the order supports.
This means that the core questions about whether your settlement can be included in any of these calculations will focus on whether your settlement is “income” in the first place.
Is My Settlement “Income” for Child Support Calculations?
Personal injury claims cover a wide range of damages:
- Medical expenses
- Lost earnings
- Pain and suffering
- Property damage (e.g., in a car accident case).
When you get these damages paid, our New York personal injury lawyers are often careful to account for which amounts compensate each area of damages, as this can be important when it comes to other expenses, benefits, child support, and other obligations you might have.
Some areas can be considered income when it comes to calculating child support, but others should not.
Lost Wages
Typically, if you get lost wages from an injury case, they are there to replace the wages you got before the accident. That means they are still income, and the family court should be able to consider that amount when calculating your child support obligation.
If, for some reason, you were not able to compensate all of the lost earnings you faced in your settlement, and you now make a lower wage after the injury, that could support lowering your child support obligation or otherwise modifying an existing order.
Other Reimbursements
Compensation for other parts of the injury – medical bills, property damage – should be used to pay you back or to cover the cost of those outstanding bills. They are not really income, in that you do not really keep this money; it goes right out the door to cover the expenses you have.
Pain and Suffering
Pain and suffering is also usually paid because of the injury, not as replacement wages, so that should not go into your child support calculations either.
How Do Lump Sums vs. Annuities Affect Income for Child Support?
Let’s say you are just getting your settlement and you are considering whether to take it as an annuity or a lump sum. At that point, you will need to look at how child support will factor in the money. This matters both when you are just starting to pay support and when facing a modification request from the other parent.
If you are getting an annuity, then a fixed portion of that is paid every pay period to cover your lost wages. That might make calculating child support easiest, since you will be getting a steady “income” every month that can be used in the calculation.
If you get a lump sum, it is intended to cover lost wages over a certain period. The family court can essentially break that total sum down into monthly periods and use that to calculate how much of your “income” to consider for monthly child support obligations.
There is not necessarily a risk or benefit to getting the money at once or over time, as the other parent can still go after the relevant portions of your settlement for support either way, but garnishment might strongly affect your decision.
Can The Court Garnish My Settlement to Pay Back Child Support?
If you are behind on your child support, then there is usually a requirement to report a settlement. In cases where the lawsuit is before a judge, they may even be required to check on your back child support status before approving a settlement. This is because the courts will want to garnish your settlement to cover back support.
This is usually only done if you are already in arrears before the settlement. If you have been paying on time, you may be entitled to modification now that your income has changed with the settlement, but there are no back payments to cover.
Structuring an Injury Settlement to Protect Funds from Garnishment
When the court wants to garnish your settlement for back child support, they can take it from a lump sum or an annuity. However, which form your settlement takes might change how much is available at a time.
With a lump sum, they take a portion of the lump sum settlement to pay back all of the back child support, reducing your overall settlement. This often takes a large amount at once. However, they then have to look at how much “income” is left in the lump sum to use for future payments, potentially modifying your obligation amount.
If you are getting an annuity instead, this might limit how much they can take at once. Your settlement payments will still be garnished going forward, but courts have limits on how much garnishment can be. These limits can potentially leave you with more financial flexibility each month.
Of course, there are other considerations when it comes to financial freedom and the realities of living off an annuity, so talk to your lawyer about all of these relevant issues when determining how to structure a settlement.
Call Our New York Personal Injury Lawyers for Help with Your Injury Case
Speak with our Flatbush, NY personal injury attorneys at The Carrion Law Firm today for help with your injury case by calling (718) 841-0083.