If you have been in a life-changing accident, it is almost certain that you have experienced a variety of financial impacts that will have long-term effects on your life. This is just one reason why working with an experienced, aggressive personal injury attorney to make sure that you get the amount of money that you need and deserve in a settlement, but even this may not be enough to avoid concerns about creditors or bankruptcy. Read more here about how to find the right personal injury attorney for your case, but read below to get a general idea of how to protect your settlement money from being distributed among a variety of parties who would love to get a piece of your award.
You will be happy to know that your settlement money is what is known as “exempt,” which means that it is held separately from other things like income, assets, and property when it comes to things like debt collection. However, you need to make sure that you are proactive in taking the appropriate measures to make sure that this money stays exempt, and therefore stays protected no matter what type of other legal issues you are dealing with.
While creditors and other financial officers are certainly a concern when it comes to settlement money, one of the biggest risks to losing your settlement money is by spending it too quickly on your own. It is all too common for a victim to be awarded a settlement amount that is intended to cover costs for past and future medical expenses and impacts to their income, but quickly discover that they have mismanaged or misallocated the funds in a way that is unsustainable for their long-term financial health. Working with a financial planner in order to ensure that you work within the limits necessary to make this settlement last.
Separating Your Funds
When you receive a settlement, it is absolutely essential that you keep this money in a separate account from your personal money. As soon as you move any, or all, of your settlement into any other accounts—known as commingling—then this money is no longer considered exempt, as it is indistinguishable from other finances. Open a separate account that will be solely for holding your settlement money, and however you decide to use it, make sure that you have worked with a financial advisor to ensure that it stays separate until you are no longer concerned about whether or not it is exempt.
Getting Creative With Storing Your Settlement
If you have judgments against you that have led to wage garnishing or other forms of collection, one way to keep your settlement money away from collections agencies and creditors is by putting the funds onto a prepaid debit card. Since this card is not connected to your bank accounts, it is unlikely that the card will end up being garnished. Since this money is “exempt,” make sure that you retain any and all documentation related to your settlement and the transfer onto this prepaid debit card so that you can prove the origin of these finances if you are ever required to do so.
Allocating Your Settlement
One of the most effective ways to ensure that you can hold onto your settlement is by decreasing your lump access to the funds. This could be done by agreeing to an annuity, which means that you will receive structured payments for a specified amount of time, by starting a trust to manage the finances, or by using investments to generate interest on your settlement. The most important thing to consider when deciding how to allocate these funds is the degree of liquidity, and therefore your risk of losing this money when it is too accessible.
Lastly, if you are reading this posting because you’ve been hurt in an accident and you need a lawyer, consider contacting Obrien and Ford, they’re a personal injury firm in Buffalo, New York. Their service is top notch, and if you’re not in New York state, they can probably refer you to someone local.