Undoing a Structured Judgment in New York
A structured personal injury judgment pays a personal injury award in scheduled installments rather than a single check. For many injured people, that steady stream of income is beneficial, providing predictable support for medical care and daily living for years, or even decades, to come. But that same predictability can turn into a serious obstacle the moment life stops following the schedule. A new surgery, a complication no one anticipated, or another sudden financial emergency does not wait for the next installment date, and a fixed monthly payment often cannot stretch far enough to cover it.
In This Article
When a Structured Judgment Can Be Converted to a Lump Sum
New York law does not lock a structured judgment recipient into that payment schedule forever. Civil Practice Law and Rules (CPLR) § 5046 gives a judgment creditor, or a successor in interest the ability to petition the court for relief. If continuing to receive periodic payments would impose a hardship, that petition can ask the court to convert some or all of the remaining payments into a single, immediate lump sum.
Filing the petition is only the first step. A judge decides whether the circumstances justify departing from the original payment schedule.
Requirements to Qualify for a Hardship Lump Sum
Before ordering a lump sum under CPLR § 5046, the court must make four separate findings. A petition that falls short on even one of them can be denied.
Proof of Severe Hardship
The petitioner must show that an unanticipated and substantial hardship, such as a major medical complication, a newly required surgery or course of treatment, dental needs, or another serious unforeseen need, has arisen since the judgment was entered. The hardship has to be both genuine and something the original judgment did not already account for.
No Unreasonable Burden on the Debtor
The court must also find that paying out the lump sum will not place an unreasonable financial burden on the party or parties obligated to pay the judgment. A petition that would leave the paying party unable to meet its own obligations is unlikely to succeed.
Accommodation of Future Needs
A lump sum cannot solve today's problem while leaving tomorrow's needs unfunded. The court must find that the lump sum will accommodate the creditor's future medical and other needs, not just provide short-term relief at the expense of long-term care.
Interests of Justice
Finally, the court must conclude that, taking everything together, ordering the lump sum serves the interests of justice. This is the court's opportunity to weigh the full picture before departing from the payment structure the original judgment established.
How the Lump Sum Is Calculated
When a court grants a hardship petition, the lump sum is not an arbitrary number. It is calculated based on the present value of the remaining periodic payments at the time of the conversion, and it cannot exceed that present value. If only a portion of the remaining payments is converted, the balance keeps flowing on the original schedule, apportioned accordingly, rather than the entire structured judgment being unwound at once.
Sternberg Injury Law Firm
Anyone currently receiving periodic payments under a New York personal injury structured judgment, or a family member acting as a successor in interest, who is facing a hardship the monthly checks cannot cover can contact the Sternberg Injury Law Firm for a free consultation. Our firm can investigate the hardship, gather the supporting medical and financial evidence a petition requires, calculate the present value of the remaining payment stream, and advocate for the requested lump sum.
Frequently Asked Questions
A sudden decline in condition, such as a new surgery, a serious complication, or a diagnosis that was not anticipated when the judgment was entered, is exactly the type of event a hardship petition is designed to address. The court will not accept the worsening injury alone; it still has to be satisfied that a lump sum is appropriate under all the required findings, but a documented, unanticipated medical change is often the strongest evidence a petition can present.
Ordinary debt or routine living expenses, on their own, are unlikely to satisfy the hardship standard because they are not the kind of unanticipated and substantial need the law is aimed at. When mounting medical bills or lost income are what pushed other bills into default, a petition can trace that financial strain back to the injury itself, which is a much stronger basis for a lump sum than the debt alone.
No. The decision belongs to the court. The party responsible for making the payments will typically be notified of the petition and may oppose it, but it does not hold a veto over whether a lump sum is granted.