New Jersey Statute N.J.S.A 2A:17-56.23b (1) (a) provides that a judgment for child support entered and docketed with the Clerk of the Superior Court constitutes “a lien against the net proceeds of any settlement negotiated prior or subsequent to the filing of a lawsuit, civil judgment, civil arbitration award, inheritance or workers’ compensation award.” This lien has “priority over all other levies and garnishments…unless otherwise provided by the Superior Court, Chancery Division, Family Part.
The lien shall not have priority over levies to recover unpaid income taxes owed to the State. The lien shall stay the distribution of the net proceeds to the prevailing party or beneficiary until the child support judgment is satisfied.” What this means is that the net proceeds of your personal injury settlement is subject to a lien that must be satisfied before you can recover the proceeds of the settlement. “Net proceeds” of the settlement is defined as “any amount of money, in excess of $2,000…after attorney fees, witness fees, court costs, fees for health care providers, payments to the Medicaid program…, reimbursement to the Division of Employment Security in the Department of Labor, the employer or employer’s insurance carrier for temporary disability benefits that may have been paid pending the outcome of a workers’ compensation claim…, reimbursement to an employer or the employer’s workers’ compensation insurance carrier…, and other costs related to the lawsuit, inheritance or settlement are deducted from the award, proceeds or estate…” Therefore, if the net proceeds are $2,000 or less, there is no lien and no need for a search. In addition, the Appellate Division has held that only the amount of the plaintiff’s settlement after litigation costs which exceeds $2,000 is subject to the lien imposed by N.J.S.A. 2A:17-56.23b. Simpkins v. Saiani, 811 A. 2d 474, 356 N.J. Super. 26 (App. Div. 2002). Attorneys who represent injured parties in New Jersey are required by law to conduct a search before distributing any settlement proceeds to determine whether the settling party has any child support judgment again him or her.
N.J.S.A 2A:17-56.23b (1) (b) provides that before distributing any net proceeds of a settlement, judgment, inheritance or award to the prevailing party or beneficiary, “(1) the prevailing party or beneficiary shall provide the attorney, insurance company or agent responsible for the final distribution of such funds with a certification that includes the prevailing party’s or beneficiary’s full name, mailing address, date of birth and Social Security number; and (2) the attorney representing the prevailing party or beneficiary shall initiate a search of child support judgments, through a private judgment search company that maintains information on child support judgments, to determine if the prevailing party or beneficiary is a child support judgment debtor.” If the child support search certification shows that the prevailing party or beneficiary is a child support judgment debtor, the attorney that initiated the search shall contact the Probation Division of the Superior Court to arrange for the satisfaction of the child support judgment. The attorney shall notify the prevailing party or beneficiary of the intent to satisfy the child support judgment prior to the disbursement of any funds to the prevailing party or beneficiary. Upon receipt of a warrant of satisfaction for the child support judgment, the attorney shall pay the balance of the settlement to the prevailing party or beneficiary. If the net proceeds are less than the amount of the child support judgment, the entire amount of the net proceeds shall be paid to the Probation Division as partial satisfaction of the judgment.