If you win at trial, you will receive a court document stating that the defendant owes you money. However, the court itself does not collect the money. You must collect the money yourself. If the defendant pays up, the case will end with the defendant paying one sum of money. This article deals with a personal injury plaintiff as a defendant’s creditor.
Barriers to Collecting a Personal Injury Judgment
What If the Defendant Is a Corporation?
Corporations usually either appeal the decision or pay the judgment. In some cases, the corporation might not have much money to spend. If that happens, you might have to pierce the corporate veil. In other words, you’ll have to go after the corporate owners directly. This can only occur if the corporate owner fails to keep the distinction between the owner and the corporation.
What If the Defendant Is Getting Divorced?
State-specific laws govern this. In states that separate marital property, creditors can only access the property or money that the defendant managed. If the defendant’s spouse/former spouse managed a property without the defendant, you could not access the asset.
In a community property state, you can access the property and money of both spouses. Some states require that you collect everything you can from the defendant before pursuing the spouse.
In some states, the debt is split evenly between the spouses. You might have to wait until the divorce is finalized before discovering which spouse can be collected from.
What If the Defendant Is a Beneficiary of a Trust?
Trusts are among the largest sources of funds a defendant could have. In most trusts, one party is tasked with holding the trust funds until the defendant is ready to receive them. Consequently, if the defendant does not already have access to the trust, accessing it can be difficult.
There are a few ways of accessing a trust, depending on the type of trust involved. When the trust creator dies, the money is released to the defendant. You can’t wait forever, but if you have time, waiting might be an option. Some trusts allow creditors to attach liens to the trust itself. In the event the trustee distributes money, creditors will be paid first.
Depending on the circumstances, some states allow creditors to access the trust. In some states, you could access the trust if the defendant committed a felony, such as a hit and run. Some states allow creditors to collect trust funds if the funds exceed the trust’s purpose, such as payments for the defendant’s college tuition.
Lastly, most states will allow creditors to access the trust if the trust’s purpose is fraudulent. You might be able to challenge the trust’s validity if the defendant created the trust to avoid having to pay you.
What If the Defendant Declares Bankruptcy?
If the defendant files for bankruptcy, the defendant must list you, the personal injury creditor, on its bankruptcy documents. Your claim will not be dischargeable if the defendant fails to do so.
If the defendant correctly lists you as a creditor, your options will differ depending on the type of bankruptcy filed. In a Chapter 7 bankruptcy, your claim will most likely be discharged. The only exceptions are if the injury was malicious or if the case involved a DUI.
You can try to negotiate payment with the defendant in a Chapter 13 case. In light of the fact that your claim is still subject to discharge, but that discharge might not come for another three to five years, your chances of success are low.
A corporation is most likely the defendant in a Chapter 11 case. In the bankruptcy proceedings, your claim will be part of a larger class of creditors, and your class will have a say. If the corporation restructures, you might not be able to collect your claim for a long time, if at all.
The Different Ways To Collect A Personal Injury Judgment
Uninsured motorist coverage on your auto policy becomes more important as the number of uninsured motorists increases. Today, with the high cost of insurance premiums, there are many people who cannot afford this additional coverage or are not even offered it by their insurance agent when they acquire a new policy.
Due to the ambiguity of this term, many people are misled when purchasing “full coverage” auto insurance policies. Full coverage refers to the minimum legally required coverage, which in Florida is $10,000 in Personal Injury Protection (PIP) benefits and $10,000 in Property Damage benefits, for example. Others define it as coverage that goes beyond the minimum requirements.
When you are hurt in an automobile crash that is not your fault, and the at-fault driver did not have bodily injury coverage on their auto policy at the time of the accident or did not have enough to compensate you for your damages fully, and there are no uninsured motorist benefits available to you, you may have little choice but to file a lawsuit directly against the at-fault driver.
The court enters a judgment against the liable party when you win a personal injury lawsuit. You will then be obligated to receive the money awarded. Nevertheless, collecting a monetary judgment may be difficult since the court is not responsible for collecting the personal injury judgment – this is your sole responsibility. However, there are court-based procedures you can follow to collect on a judgment.
Should the responsible party/judgment debtor fail to make a voluntary payment of the full amount of the judgment or arrange a payment plan, you may proceed to enforce payment.
Court judgments can generally be enforced by various methods, including:
- You can place a lien on a judgment debtor’s non-exempt (non-homestead) real estate.
- You may also be able to have a sheriff seize the judgment debtor’s property. Levy refers to the process of taking property by the sheriff. After the sheriff has levied on the property, they will sell it and pay you out of the proceeds of the sale.
- Garnishing the debtor’s bank account may be possible. Some accounts are exempt from garnishment, such as those held jointly with someone who is not liable to pay the judgment.
- A personal injury judgment may be collected by garnishing a portion of the debtor’s wages.
Suppose the judgment resulted from a motor vehicle accident that occurred while the debtor was driving without valid insurance. In that case, you may also ask for their driver’s license to be suspended until the judgment is satisfied.
Since court-based collection procedures can be cumbersome and costly, the collection efforts ultimately hinge on if the personal injury debtor has non-exempt assets you can pursue. When the at-fault driver carried bodily injury coverage, it may be better for you to accept it as a guaranteed payment of your damages rather than pursuing the full amount.
Do I Need an Attorney?
There are several confusing legal procedures that a lawyer can explain to you to reduce your liability and increase your chances of collecting the debt. If you choose to go to court, hiring a personal injury lawyer can be vital to getting a judgment against the debtor and collecting the money you are entitled to.
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