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Can a workers’ comp settlement be garnished?

| Jul 19, 2018 | Workers' Compensation

Workers’ compensation benefits are not a financial windfall. Part of the purpose of workers’ comp is to ensure that workers injured on the job don’t pay out of their own pocket for the medical treatment they need to recover.

The other key element of workers’ comp coverage is cash benefits that cover a portion of lost wages. The amount received depends on: the nature of the worker’s disability, the worker’s earnings record and a schedule set by the state. Pursuing optimal benefits requires understanding the system’s complexities.

What about debt collection?

If you are like many injured workers, you may be making ends meet but facing significant debt. If meeting that debt was a challenge before your injury, chances are you have little or nothing to spare.

You might be wondering if your workers’ comp benefits can be garnished to pay your debts. In most cases, workers’ compensation benefits are safe from debt collection.

Federal and state laws regulate the types of income that creditors can go after when trying to collect on outstanding debts. Generally speaking, wage replacement under workers’ compensation is immune. But the protection is not absolute.

For example, a New York statute counts workers’ compensation as income the government can garnish if you owe spousal or child support. In addition, if you receive insurance settlement funds from a separate, third-party legal action related to your work injury, that money might be subject to creditor garnishment.

Do you have questions?

As straightforward as workers’ compensation is in its purpose, the processes can be complicated. If you are unfamiliar with the system, it’s important to seek the guidance of a skilled attorney.