Can Creditors Take My Personal Injury Settlement?

Sometimes, but state law protects part of it. California exempts a personal injury settlement to the extent it is needed to support you and your family under Code of Civil Procedure 704.140, Washington protects up to $20,000 of a bodily injury payment under RCW 6.15.010, and bankruptcy has its own limit. Medical liens and unpaid child support follow different rules and are often paid first.

Can a personal injury settlement be garnished?

It depends on who is collecting and what kind of money it is. An ordinary creditor, such as a credit card company or a hospital without a lien, generally collects through a court judgment and then a levy on a bank account or other property. State exemption laws decide what that creditor cannot take. Many exemptions are not automatic: you may have to claim them, and fast.

In California, for example, the courts’ self-help page on responding to a bank levy says to file a Claim of Exemption within 15 days after you receive the Notice of Levy, or 20 days if it came by mail. You must write the code section that makes the money exempt. If you miss the deadline, the money can be turned over to the creditor.

This page is general information. Exemptions turn on details such as what the money was for, when it was paid and whether it was mixed with other funds, so talk to a lawyer before you move or spend the money.

Does California protect a personal injury settlement from creditors?

Yes, in part. The Judicial Council’s list of exemptions from the enforcement of judgments (form EJ-155) names section 704.140 for personal injury claims, section 704.150 for wrongful death and section 704.160 for workers’ compensation.

A federal bankruptcy court in California quoted section 704.140 this way (In re Rubio): a cause of action for personal injury is exempt without making a claim, and an award of damages or a settlement arising out of personal injury is exempt “to the extent necessary for the support of the judgment debtor and the spouse and dependents.” The court explained that once a claim is paid, the question becomes how much of the money you actually need for support. That depends on your income, expenses and family.

What does Texas law protect?

Texas protects listed personal property in Property Code chapter 42. Items such as home furnishings, clothing, a vehicle for each licensed family member and tools of a trade are exempt up to a total value of $100,000 for a family or $50,000 for a single adult. Current wages are exempt as well, except to enforce court-ordered child support.

The list in section 42.002 does not name personal injury recoveries as a separate category. If you live in Texas and a creditor has a judgment against you, get advice before the settlement is paid, because the answer can depend on what the money is used for and other Texas laws.

What does Washington law protect?

RCW 6.15.010 protects several kinds of injury money from ordinary creditors:

• up to $20,000 paid on account of bodily injury, not counting pain and suffering or compensation for actual financial loss;
• payments for loss of future earnings, to the extent reasonably necessary to support you and your dependents;
• in a bankruptcy case, the right to or proceeds of a personal injury claim, except for liens or subrogation claims that arise from that injury claim.

The statute also says the bankruptcy protection does not apply against the State of Washington when it holds a lien or subrogation right under RCW 43.20B.060.

Can I protect my settlement in bankruptcy?

Bankruptcy has its own exemptions. The federal list in 11 U.S.C. 522(d)(11) covers a payment for personal bodily injury, not including pain and suffering or actual financial loss, in an amount adjusted over time. The notes to the statute show it was set at $31,575 for cases filed on or after April 1, 2025. Payments for lost future earnings are covered to the extent reasonably necessary for support.

Whether you may use the federal list depends on your state. The U.S. Courts explain that many states have opted out and require their own exemptions, while in others you choose between the two. A bankruptcy lawyer should review your settlement before you file.

Are medical liens and child support different?

Yes. These claims often reach the settlement before an ordinary creditor could.

• Medical liens. Medicare must be repaid from the settlement under 42 CFR 411.24. Medi-Cal can assert a lien (DHCS). Texas hospital liens are governed by Property Code chapter 55, and Washington caps provider liens from one accident at 25 percent of the recovery (RCW 60.44.010).
• Child support. A Texas child support lien attaches to a claim for compensation and to a settlement or award for that claim (Family Code 157.317). In Washington, insurers must report bodily injury claims to the Division of Child Support, which can direct the insurer to withhold payment and send it to the agency. Reasonable claim-related attorney fees, property damage and medical costs come first (WAC 388-14A-4900). In California, a county child support agency says it can request up to the full net settlement to pay arrears. Nationally, the federal Insurance Match program lets child support agencies find upcoming insurance payouts and contact the insurer to intercept them.

What to do now

1. Tell your lawyer about any judgment, levy, collection lawsuit or child support case right away.
2. Ask for a list of every lien on the case and its current amount.
3. If a creditor levies your bank account in California, file a claim of exemption within the deadline on the Notice of Levy.
4. Keep the settlement in its own account and keep the closing statement that shows what it was for.
5. Before you file for bankruptcy, have a bankruptcy lawyer review the settlement and the exemption you plan to claim.
6. See how settlements are paid out for the order in which money leaves the trust account.

Talk to someone before the money is paid

If you have debts or a child support case and an injury claim in California, Texas or Washington, call Beverly Law at (310) 552-6959 to talk about your claim. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. You owe no fees or costs unless we win.

Common questions

Related pages

Car Accident Settlements · Car accident settlements · How personal injury settlements are paid out · Your settlement check · Are personal injury settlements taxable? · Law Blog

Important: This page is general information, not legal advice, and reading it does not create an attorney-client relationship with Beverly Law. Laws change and every case is different; talk to a lawyer about your own situation. Attorney advertising. Prior results do not guarantee a similar outcome. You owe no fees or costs unless we win. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: 2026-11-12.