Are Personal Injury Protection (PIP) funds exempt from garnishment?
I was in an accident and have been receiving PIP funds since the accident which has been about 5 months now. Still not able to go back to work. Well after my accident i was issued a court order to go to court for apartments i moved out of 8-10 months prior and could not make it and had no idea where to send monthly payments to the collections agency even after contacting the attorneys of the plaintiff. I did not make the court date because i had no way to get there after my car was destroyed in my accident. I received the judgment from the court shortly after the date and heard nothing more from anyone on where to send money. Well a couple days ago out of the blue my entire bank account was garnished leaving me with 0 in my bank. Well all that money was pretty much PIP money to pay my bills and rent ect. I live in Michigan and know that Disability and unemployment and some other funds are exempt BUT would PIP funds fall into one of these categories? I asked a local attorney and he had no idea. I have searched a TON for the answer and this is the last place i have to turn to find my answer in order to dispute the garnishment. PLEASE anyone help me out here.
Edit: Howard it was a garnishment, they gave the writ to me AFTER they took the money. Also Lauren... i called the apartments and they wouldn't tell me anything. I called their lawyers and left messages that were not responded to!
March 30th, 2010 - 08:47
This was not a garnishment, this was an asset seizure. Garnishment is when your creditor demands that whoever pays you must send the money to them first. If they get money out of the checks you receive in the future that would be garnishment.
The seizure order had to have been signed by a judge so it is legal. You always have the right to appeal and demand your money back but I suspect that will not do you any good because of how much it will cost and how long it will take. Also, any money that gets returned to you is money you will have to repay when you return to work since it is money you owe so it probably would be a waste of time to fight this no matter what.
Generally speaking only funds being paid to you by a government agency are exempt from garnishment. I suspect that payments from an insurance company are not exempt. Read your court order. It might say something different.
March 30th, 2010 - 08:48
I would contact your bank. I know that social security (both retirement and disability) are exempt from garnishment, but only if your bank is aware that those types of funds are in the account, and codes your account accordingly. Likewise, pension payments and SSI payments are protected. I am fairly certain 401k payment are protected.
But, to my knowledge, accident settlement payments are not protected, and if your bank doesn’t know about what types of payments are going in to your account, there is no way they can put the protection codes against it when a garnishment order comes in.
Your problem here is not following up on the many warnings you received. Even if your car was totaled – couldn’t you borrow a ride or rent a car for the day to get to the hearing? Did you think of calling the old apartment complex and working out a payment plan before they hired lawyers? When you got the judgment from the court, did you do anything with that?
Sounds to me like your accident is taking up all your time and energy and what you need to do now is to put your attention on this mess. And, it is a mess. Once a court judgement is issued against you, tour options now are very limited and going to be difficult and expensive to make your situation better.
First, if you believe the judgment issued against you was incorrect (either wrong amount, wrong to charge you, etc.) you have to go back to court to have the judgment vacated (= set aside). You can do this on your own by paying a filing fee, but if the money involved is big, you should hire a lawyer.
If the judgment was valid (you actually did owe this money) then trying to get it vacated will only be a waste of time and money. What you need to do instead is to try to get on a payment plan instead of letting them continue to get into your bank account. That involves talking with the attorneys for the apartment company, and also going back to court to ask the judge to modify the garnishment order in light of the financial hardship and medical complications it is creating. It’s a long shot, but if this PIP is your only income it might work.
As far as your bank goes, look into whether or not they will offer you overdraft protection or a loan to cover the bills you need to pay right now, or see if you can have someone else pay your bills from their check account. If you have any checks outstanding, they are going to bounce, further burdening you with fees unless you get overdraft coverage.
If the money taken under the garnishment mostly satisfied the judgment, see if you can borrow from someone to get it paid in full, that way you will be back in control of your bank account.
Talk to the people who are making your PIP payments and get them paid by check, which you will cash and not deposit into your checking account, so that the apartment lawyers can’t scoop up your next deposit. You may need to pay your bills with money orders for a while.
Good luck. It’s a mess. Going to take you a while to get out from under this one.
March 30th, 2010 - 09:24
No, they are not immune from garnishment.
Not only that, but once you deposit that money, it’s no longer pip money – it’s CASH money, and your bank account CAN be garnished – and was.
Even if it was an SSDI check, or unemployment check, garnishing that CHECK, means, they take the money out of the check, before mailing it to you.
That’s not what happened – what happened was, they swept your bank account. Even if you had deposited a SSDI check, once you DEPOSIT it, it’s now cash money in your account, and CAN be swept. It doesn’t stay SSDI money – or PIP money – one second, after you deposit the check.
If you’re trying to keep your debt from being paid, you’ll have to go to a check cashing place, and never deposit money in your accounts again – because they’ll KEEP getting swept, forever, until the debt (plus interest and penalties) are paid off.