No one likes paying debts, which is why the most challenging part of litigating an auto accident lawsuit is often collecting money from the defendant after you've won your case. While you may have little trouble with this aspect if the person's insurance company is cutting the check, the same can't be said when the defendant has to pay the judgment out of their pocket. Here are two ways the defendant may try to avoid making the payment and what you can do to ensure you get what's owed.
Attempt to Appear Judgment Proof
One common tactic defendants take is to make it look as though they don't have any money or assets you can tap to collect the judgment. To achieve this, defendants will do some creative accounting with their income, transfer assets to friends and family to hide ownership, and even quit their jobs.
For instance, certain types of income cannot be garnished, such as Social Security benefits, child support, and some kinds of retirement payments. Not only can you not garnish these checks, but you may also be prevented from taking money from any bank account where these protected funds are deposited. A defendant may transfer non-exempt income into the same account as one that holds protected funds hoping the entire amount can't be touched. It may take months of legal wrangling to get things sorted out.
It can be challenging to combating this maneuver. However, there are a couple of things you can do to fight back. Hopefully, you or your attorney did an asset check prior to filing your court case. This will make it easier to detect and prove the defendant is hiding money and assets to avoid paying the judgment and use the court to seize the cash and property anyway. For instance, if you can show the defendant transferred a piece of real estate into a family member's name to avoid having it taken, the court will consider that a fraudulent transfer and order the defendant to reverse the transaction so you can take the necessary steps to get paid.
Another thing you can do is comb through your state laws for loopholes. Although some income may be exempt, the law may make exceptions in certain cases. For example, retirement income is generally exempt from debt collection attempts, but that exemption may only apply to certain types of accounts, e.g. company-sponsored retirement plans may be untouchable but you could garnish money held in an IRA. Consult with your attorney for more assistance with interpreting the law and using it to your advantage.
A second common way defendants avoid paying court judgments is by declaring bankruptcy. Unfortunately, personal injury lawsuits are not protected by bankruptcy law, and the defendant's responsibility for debts associated with them will typically be discharged when the bankruptcy case ends. So, while you may have a court order stating the defendant is required to pay you a certain amount of money, you won't be able to do anything legal to get the person to pay.
Collecting money from a defendant who pulls this maneuver may be difficult but it's not impossible. First, not all personal injury lawsuits are not dischargeable, such as where the cause of the accident was DUI. Thus, if the defendant was under the influence when they hit you, you can file a petition with the bankruptcy court to exempt the debts from your lawsuit from discharge based on those grounds. The defendant will be required to pay what's owed even after their bankruptcy case ends.
The other thing you can do is put liens on the defendant's property before they file bankruptcy. Although your lawsuit may be discharged in the bankruptcy case, the lien attached to a home, car, or other valuable property may survive. The lien prevents them from selling the property, and you can require the defendant to pay what's owed in order to remove it should they want to transfer the property to someone else in the future. This can provide compelling motivation for the defendant to take care of judgment.
For more information about this or other issues related to auto accident litigation, contact a local auto accident attorney.