If you’re dealing with a personal injury case and you also make child support payments, it’s important to know that an injury settlement could affect your payment plan. There are several ways that an award could affect your payments, so it’s often recommended that you speak to a family law attorney about your situation. The following is some general information that may be helpful on this issue.
Personal Income and Settlements
The majority of states consider a personal injury settlement to be personal income. Other states, such as Alabama, New York, and Pennsylvania, have restrictions on settlement amounts being considered personal income. For example, if a settlement exceeds $1,000, that money might be considered personal income; if a settlement is under $1,000, the state might decide that it’s not income.
If you’ve recently experienced a personal injury, you might have fallen behind on your child support payments. This is understandable — after all, a serious injury can be very stressful and a personal injury claim can be very time-consuming. However, you have a legal and financial obligation to make your payments on time or as soon as possible. If you’ve fallen behind on payments and then you receive an injury award, you might be required to use some or all of your settlement money for child support.
Loss of Wages and Child Support
Many injured victims find that they need to take time off from work to recover. This can lead to lost wages, which may affect a person’s income and therefore their child support payments. Personal injury settlements often compensate for lost wages, so it’s likely that some of this compensation will have to go toward child support payments. If this is relevant in your situation, a family law attorney can work with you to figure out how much of a settlement will likely be directed into child support payments.
Future Child Support Payments
Again, a personal injury settlement is typically considered personal income. This may affect child support payments in the future if your settlement is legally considered personal income. Even if your settlement has been negotiated outside the courtroom, you may still have to claim this as taxable income. A substantial settlement might result in higher child support payments in the future, especially if there is significant compensation for intangible pain and suffering. If your settlement focuses primarily on compensation for medical bills and daily living expenses, you might not see a major change in child support requirements.