Can Creditors Take Your Lottery Winnings? A Guide to Winners’ Rights
Winning the lottery is an amazing feeling. But in some states, individuals who owe debts are in for a nasty surprise.
Have you won the big bucks lately or hit the jackpot? Do you know someone who has and owes you money?
If so, chances are you’re wondering if the lottery winnings can be used to pay past debts. Can creditors take your lottery winnings?
We have all the answers here.
Can Creditors Take Your Lottery Winnings?
The short answer is that it depends. Winners are often dismayed to see their earnings disappear to things like taxes, which is why a lottery lawyer is beneficial.
And, in some states, even more winnings disappear because creditors can take lottery winnings. In others, they can’t.
Most states allow government agencies to collect winnings. However, most only allow garnishments in specific instances, such as scenarios involving unpaid childcare, debts to the state and unpaid taxes.
In addition, most states set winning amount requirements. Arizona, for instance, only allows prize money to be taken for winnings over $600. In Georgia, however, individuals must win over $5,000.
Some of the states that allow government agencies to take winnings under varying circumstances include:
While most states allow government agencies to garnish prize money, there are only a few states that allow private creditors to collect winnings.
Always check your state laws to see if winnings can be taken and under what circumstances.
How the Process Works
It takes considerable effort to garnish lottery winnings. This is because creditors must have a debt judgment against you.
Creditors obtain debt judgments through debt collection cases. In these cases, the court rules that the debtor owes the creditor money.
With the judgment, a creditor has the right to seize assets and earnings to obtain the amount owed.
In most states, creditors must have a judgment proving lottery winners owe them money to even consider seizing part of the winnings.
After obtaining a judgment, the creditor returns to court. There, the agency seeks an enforcement order.
If the court provides the creditor with a writ of execution, the creditor has the right to garnish the lottery winnings.
The creditor and court provide the writ of execution to the lottery company, who gives the due payment to the creditor rather than the winner.
Specific details are set forth by the court.
Even in states that allow creditors to take lottery winnings, there are a number of factors that impact if and how this occurs.
The lottery winner must receive the state’s minimum amount. There are also time limits in which creditors must seize winnings.
Finally, many courts restrict the amount that creditors seize or only allow them to garnish winning amounts, similar to the garnishing of paychecks.
Hire a Lottery Lawyer
Can creditors take your lottery winnings? Is there anything you can do to protect your prize?
These are common questions after winning the lottery, and Manfred Sternberg & Associates have the answers. Call our office with questions about collecting debts, protecting winnings and making the most of your lottery experience.If you've won the lottery, but you owe debts, you might wonder, "Can creditors take your lottery winnings?" Read here to learn more about your rights.
Can Creditors Take My Lottery Money
Can Creditors Take Your Lottery Winnings
Winning the lottery is one of the most exciting and life changing moments that can happen to you. But winning the lottery when you owe someone money or are in debt presents the risk of you losing all that money or a significant portion of it. If someone that owes you money wins a lottery, then you may have a chance to get your money back. An experienced lottery lawyer can help you get your money from a lottery winner or help you protect your winnings from creditors.
Your State’s Laws May Protect Your Winnings
All a debt free lottery winner has to worry about is the amount of money they are going to pay in taxes. But those who are in debt also have to worry about creditors or government agencies taking their lottery winnings. While only a few states allow private creditors to garnish your lottery winnings, most states allow government agencies to collect winnings. Government agencies can do this in a situation involving unpaid childcare, debts to the state, and unpaid taxes. Some of the states that can collect your winnings include Georgia, Iowa, Arizona, Louisiana, Texas, Florida and more.
Debt Judgments And Enforcement Orders
Before a creditor can start garnishing your lottery winnings, the creditor needs to obtain a debt judgment through a debt collection case. Once a court rules that the lottery winner owes the creditor money, the creditor will still have to get an enforcement order from the court. This enforcement order is called a writ of execution, and it allows the creditor to seize assets and earnings to obtain the amount owed. After receiving the writ of execution, the lottery company will give the due payment to the creditor rather than the winner.
This whole process of going after debtor winnings is not easy for creditors. This is especially true in states that require the creditor to prove that the lottery winner actually owes them money. Apart from this, there are a number of states that set the minimum amount a lottery winner must receive. That means that the creditor may not get all the money the debtor owes if garnishing the winnings will prevent the lottery winner from getting the required minimum amount.
What Happens If You Win While Your Are In Bankruptcy?
If you filed a Chapter 7 bankruptcy before you bought the ticket, then you should be able to keep your lottery winnings. But if you won the lottery before filing for bankruptcy, you must list the winnings in your bankruptcy schedules. The trustee will have access to those winnings unless the court declares some or all of the winnings as exempt. You must also list the winnings in your bankruptcy schedules if you bought the ticket before filing but filed before the drawing. Lottery winners can still get the excess amount if all of their bankruptcy costs are paid. Do not conceal your winnings from a trustee or creditors because that is considered as bankruptcy fraud. Bankruptcy fraud is a crime that can result in a five year jail time and fines of up to $250,000.Can Creditors Take My Lottery Money Can Creditors Take Your Lottery Winnings Winning the lottery is one of the most exciting and life changing moments that can happen to you. But winning the ]]>