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.