Will a Personal Injury Settlement Affect Child Support

Will a Personal Injury Settlement Affect Child Support?

According to the Bureau of Justice Statistics, plaintiffs win just over half of all civil lawsuits in the US.

Perhaps you have just received a personal injury settlement, or maybe you are anticipating a settlement. If so, you could be wondering how this settlement will impact your child support payments.

When the courts award child support, the amount reflects both the needs of the child and the resources available to the parents. When new resources become available – in the form of a personal injury settlement, for instance – the court may adjust your child support payments to account for this new income.

So, settlements might change child support payments, but not in all cases.

The Reason for the Settlement Counts

One of the primary intended uses for a personal injury settlement is to pay for medical bills. For this reason, many injured parents do not find themselves in the position where a settlement leads to more income. If there are documented medical expenses to meet, this money cannot be earmarked for child support.

Sometimes, though, settlement payments compensate the plaintiff for lost wages. When this occurs, the matter becomes of interest to the court. The court may argue that the plaintiff now has more resources available to support themselves. Logically, this money could also be used for child support.

Each case will differ.

Regular Payments vs One-time Payments

Sometimes, a personal injury settlement is made as a one-time payment. In many states, one-time payments are not included in child support calculations. One-time payments can include gambling winnings, gifts, and personal injury settlements.

The logic underpinning this is that the parent is not reasonably expected to gain or win that amount at predictable, regular intervals. As such, it is unreasonable to expect them to pay additional amounts at predictable, regular intervals.

This scenario can play out differently when the settlement is intended to cover lost income the parent would have earned had they not been off work recovering from accident-related injuries.

The Court Evaluates the Child’s Needs

Usually, a court does not order one parent to pay a portion of their personal injury settlement to the other parent without first examining the needs of the child. The child support formula will also be applied.

In many states, separate formulas exist for addressing those with very high incomes. This sometimes applies temporarily when one parent obtains a substantial settlement.

The court has one overarching goal: to ensure the child has access to the same resources as they would have had if their parents were still married. The final court order should reflect the child’s best interests above all else.

How Child Support Orders Change In Line With New Income

You will find that child support payments vary from state to state. Every state utilizes a different formula to establish the income of both parties, as well as the needs of the children concerned. Typically, child support payments decrease as a percentage of income the more the parent earns.

Child support will normally account for the frequency of overnight stays each parent spends with the children.

In some situations, the court does not need to follow the child support formula.

Ultimately, each case will play out differently, and there is no sure way to determine what a court will do in any given case.

If you have or anticipate a personal injury settlement and you either pay or receive child support, you should consult an experienced child custody lawyer. They will help you evaluate your case, presenting your issues favorably to the judge.

When a personal injury settlement is intended to compensate the victim for lost wages, this settlement can be considered income for the purposes of child support.

The court aims to accurately establish the resources available to the parent paying child support when fashioning a child support award.

Once a settlement is reached, or when the suit is resolved at trial, the insurance company issues a check for you and your attorney. This check will be sent to your attorney’s office. Once your lawyer receives the check, they deposit it into an escrow account. The funds can then be disbursed.

As well as any child support liens, your lawyer also pays all other fees and liens from the proceeds of your settlement check. These can include:

  • Professional witness services
  • Unpaid medical bills
  • Attorney costs
  • Fees

With all fees and liens paid, you keep the remainder of your settlement.

Remember that personal injury settlements can influence child support now, and they can also impact future calculations for child support. Speak with your attorney to determine whether this settlement will affect your income and money available for child support as you move forward post-settlement.

The timeline of personal injury cases varies substantially, with checks sometimes issued after just one month, but sometimes taking months or even years. If your attorney needs to negotiate liens, this will delay things.

Managing Member at Uplift Legal Funding
Jared Stern is an experienced financial professional with six years of experience in the pre-settlement funding industry. After graduating from UC Berkeley with a degree in economics in 2014, Jared began his career in Morgan Stanley's mergers and acquisitions investment banking division. After working with another pre-settlement funding company for two years, Jared founded Uplift Legal Funding in 2017 to give injured plaintiffs a better choice in lawsuit loans. Check Jared out on: LinkedIn | Legal Reader | Attorney At Law Magazine
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