Can Receiving a Personal Injury Settlement Increase Your Child Support Payments?

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A Pennsylvania father who worked as a laborer for a paper company was recently required to increase his child support payments when he settled a personal injury claim.

The father was initially ordered to pay $200 per month toward the support of his 10 year-old daughter. At the time the order was issued, the father was living on his workers’ compensation benefits. His work-related injury was serious, and was further complicated by the malfunction of exercise equipment he was using at a physical therapy facility. The additional injury from the exercise machine led to the need for a complete surgical replacement of his knee. Unable to return to his former employment, the father sued the physical therapy facility and recovered $300,000. The mother promptly petitioned for an increase in child support.

Pennsylvania law provides that child support obligations are mathematically calculated, based on initial considerations of the respective incomes of both parents. The father claimed that the personal injury settlement was not “income” for the purposes of calculating his support obligations. Instead, he claimed it was an asset and that only the interest he earned on the money could be considered income. The father also argued that he did not have all the money, having used some of it to buy two cars and having paid the mother money he owed her as a result of their divorce settlement.
The court divided the settlement proceeds by 12 months and included the entire proceeds paid to the father in his annual income, calculated on a monthly basis. The resultant calculation raised the father’s monthly support obligation from $200 to $1,058.

The court noted that its decision would not be any different if the father received the settlement money in one lump sum or in an annuity payable over a period of time. The court observed that while such settlements are not considered income for tax purposes, the long-standing approach of the court in support matters is to focus on actual, available income and resources, without regard to tax laws.

If you are obliged to pay child support, spousal support, or court-ordered alimony and you anticipate a personal injury settlement, you should be prepared for support or alimony modification litigation. If you are the recipient of support payments, be sure to take prompt action if the payor receives a personal injury settlement.