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The idea of Child support payments is to ensure the well-being of children when parents are no longer together. The parent holding custody receives the child support payments from the non-custodial parent in such a case. Generally, a percentage of the income of the non-custodial parent is calculated as the child support amount. It is estimated that over a whopping 200 Billion Dollars is being paid out as child support payment in the US every year [1].
It might get difficult for parents to pay up such heavy child support, especially if they have lost their jobs, faced an accident, or suffered some other form of financial setback. In such a case, the non-custodial parent can file to reduce the child support amount. However, if he/she chooses to ignore the payment routine, they can face various penalties and contempt of court charges. In Louisiana, parents defaulting $10,000 or six months of child support payments are included in the “Most-Wanted” list of non-custodial parents.
Personal Injury Settlements help the victim to overcome the financial, mental, and physical losses incurred. With this money, they plan their life post-injury, and hence claiming the correct amount is quintessential. However, it can often be confusing as to which amount should be claimed, and the defendant might reject the claimed settlement amount. Having an experienced personal injury lawyer by your side in such circumstances is always helpful.
Generally, the amount received from personal injury settlements is not taxable as per federal law and most state laws. It doesn’t matter if your case is settled out-of-court or within the court; the amount received remains non-taxable in most instances. As long as the money you received for lost wages, medical bills, pain, and suffering or attorney fees is due to a physical injury or sickness, the Federal tax law doesn’t apply any deductions on it.
Before we delve deeper, here are some of the factors which decide the amount that is to be paid by the non-custodial parent as child support-
Paying substantial child support might become a problem if the non-custodial parent has faced a personal injury or accident. When the income sources are paused due to accidents, the child support dues keep growing due to non-payment. The Federal law ensures that child support payments are regularly made without fail, and there are strict penalties. However, when an unfortunate accident or injury takes place, there’s nothing much that can be done. As a result of the loss of income and financial stability post an accident, filing to reduce the child support amount remains the most viable option.
While most states do regard personal injury settlement amounts as income, a few states don’t. In states like Alabama, Pennsylvania, and New York, a settlement amount of under $1000 is regarded as non-taxable. The settlement amount is paid either in lumpsum or in a structured monthly payment routine. When the structuring is done, an amount is kept under the “lost wages” section. As per the law in a few states, courts can calculate your child support dues and deduct them from your “lost wage money.” However, if the payment is made in a lump sum, the court cannot deduct the child support dues.
In the case of a monthly structured settlement, the money can be deducted for child support with the help of a withholding order. In such an order, the insurance company must send a part of the money as child support to the custodial parent at the time of disbursement.
As per the Federal laws and the various state laws, child support payments are a must for non-custodial parents regardless of accidents or injuries. In most instances, the personal injury award money can clear the pending child support payments. A lien is placed on the personal injury claim amount so that the fund can be used for child support payments.
Hence, if you are involved in a car accident or any other form of a personal injury crisis, you can lose all the money to child support dues. For such instances, you need to have an experienced personal injury attorney by your side who can drastically reduce the child support amount by removing the lien.
When a personal injury claim is sanctioned, the first bills which are cleared are-
The remaining money is then distributed to the pending child support dues first, and if something is left, it comes to you at the end. Also, what plays a decisive role here is whether the injury will need future treatment or medication. If yes, the estimated amount should be left out, and then the rest of the money can be used to clear child support dues.
Often it happens that after such serious personal injury, people lose out on their jobs and hence fail in making child support payments. It is advised to file a petition to the court explaining the financial plight in such a case. While it is nearly impossible to skip child support dues, the court can offer you a flexible payment routine and even a moratorium if needed. If you wish to keep your personal injury award money intact without deducting child support, you must present a payback plan to the court. A solid payback plan for child support dues will help you keep the settlement amount to yourself.
Be it the amount or the payment routine; you can modify child support as per your ease. Here is a glimpse into the support modification process –
Other than these, a material and substantial change can also be used to modify the child support. Here are the instances that can be clubbed under “material and substantial change” –
No personal communication between the parents can reduce the child support payment amount. The amount can only be reduced or modified with a court order. Here are the two ways it can be changed-
Legal matters are always best sorted if left to the experts as they have considerable knowledge and experience of such cases. The Legal Helpers can assist you in finding the most suitable personal injury attorney near you who can work on your case. Right from the support modification process to striking a balance between personal injury settlement and child support dues, an expert by your side will surely help! You can also check out our FAQ page on Personal Injury for your reference!
Resources-
1. https://supportpay.com/the-cost-of-child-support/
2. https://www.texasattorneygeneral.gov/child-support/paying-and-receiving-child-support/get-back-track/modify-child-support/support-modification-process
