How to Protect Personal Injury Settlement Money From Credit Card Judgments

Fighting an old credit card debt in court and losing (or not showing up in court at all) can result in a judgment being levied against you. Unfortunately, a court judgment often gives the creditor the right to take further action against you to recover the amount you owe, such as garnishing your wages and placing a levy against your bank accounts. If you have money put away in a bank account from a previous personal injury settlement, it is imperative that you take steps to prevent this asset from being garnished directly from your account via a bank levy and remanded to the judgment holder.

Instructions

1

Review your state laws regarding garnishment. Not all states permit creditors to access consumer bank accounts--even after a successful court judgment. You can find out whether or not your state allows creditors to garnish your bank accounts after a lawsuit by calling your state attorney general's office.

2

Evaluate your risk of a bank account garnishment. It is the responsibility of a creditor to find out where you bank in order to garnish your accounts. If you have been sued over an old credit card debt, it is most likely being held by a collection agency. Think about whether or not you have ever made a payment to the collection agency via a bank draft or personal check. If you have, the creditor knows where you bank and will serve the bank with a writ of execution to levy your accounts.

3

Negotiate a payment plan with your creditor, if possible. By making payments toward the judgment debt that you owe, you can prevent the creditor from attempting to take the funds by force--and garnishing your bank account.

4

Check to find out if IRAs are exempt from garnishment in your state. An IRA is an individual retirement account and some states deem that judgment creditors cannot garnish funds from an individual's retirement funds. Should IRAs be exempt from garnishment in your state, you may place your personal injury settlement money into one of these retirement funds to keep it safe.

5

Liquidate the funds from your bank account. Although a judgment creditor may have the right to pull money directly from your bank account, he or she does not have the right to come to your home and take your cash. By liquidating the bank account into cash form, you can protect it from garnishment.

6

Return to court and contest the original judgment. You may file a Motion to Vacate to reopen your case. If you can prove that you were either not properly notified of the original lawsuit or that the judgment was levied in error, you may have the judgment--and garnishment order--overturned.