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

Can Creditors Take My Lottery MoneyBefore 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. 

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