Child support enforcement is notoriously difficult, even in the age of internet searches and social media. While people tend to view the situation from the recipient's point of view, the struggle is just as real for many of the payors, who actually have legitimate reasons for not paying. Those reasons, of course, do not negate their support obligations, plus the accrued interest. This ever-present reality is a major concern for parents who are in the middle of a personal injury lawsuit. Even though a settlement is supposed to go towards their treatment and recovery, New Jersey laws require plaintiffs with child support arrears to satisfy that obligation from the net proceeds of the settlement.
So, does that mean a parent gets nothing if the settlement is equal to, or exceeds the support obligation? Not at all, but what a parent is left with can be quite disappointing depending on the support and settlement amounts. Per the child support laws, the “net proceeds” of a personal injury settlement is the amount that's left after litigation fees (attorney's fees, court costs, etc.). Anything in excess of $2,000 from the net proceeds will go toward child support arrears and interest, and the litigant would get the rest. For example, let's say a litigant is awarded $50,000 for injuries resulting from a car accident. His net proceeds are $40,000 after deducting the various fees associated with the litigation. That means anything above $2,000 out of the $40,000 amount will go towards satisfying his outstanding child support arrears.
If his arrears are a few thousand dollars, that still leaves him with a fairly good settlement amount. On the other hand, if the litigant was only awarded $20,000, he would perhaps be left with no more than $2,000 depending on the outstanding support amount. In addition, he may continue to owe child support if the proceeds after the litigation fees doesn't satisfy the entire child support amount. This is a very important factor in deciding whether or not to settle for a proposed amount. It is certainly recommended by the courts for the parties to work out a private settlement whenever possible. Doing so provides victims with the funds to recover from their injuries sooner, rather than later. However, there are legitimate reasons for refusing to settle, which is why it's important to work with an experienced attorney.
Among other things, a seasoned attorney would advise you that there is no way around your support obligations. Litigants have certainly tried, even going so far as to request that the money be called something other than “net settlements proceeds”. As much as the courts love out-of-court settlements, they reject such conditions because it would allow the payor to argue that child support arrears cannot be deducted from anything other than “net settlement proceeds”. For more information on how child support, or any other support obligation may effect your personal injury case, please speak with attorneys of Villani & DeLuca, P.C.