Sued but Have No Assets? Here’s What to Know

How does the legal process begin?

The last thing you expect as a motorist is for a car or truck to crash into you. Collisions are sudden, violent events that cause personal injuries and property damage.

Because they happen so suddenly and without warning, the drivers of the vehicles involved in a crash may not realize what caused them. It frequently takes a thorough investigation of the accident to determine its cause and whether one or more of the motorists was at fault.

One of the first and most important things to know about car accidents and the legal system is the trouble you create for yourself by discussing how the accident happened with other drivers and witnesses at the scene. You and the other drivers probably do not know what happened other than the fact the cars came into contact with each other.

Telling another driver that you’re sorry or that you were going too fast can later be used to prove that you caused the accident. It is better to say nothing and leave it to the police and investigators to gather and piece together the evidence to prove what occurred.

The legal process typically begins when someone who has injuries or property damage from an accident consults with a personal injury attorney. The first thing the attorney does is send a letter to whoever may have been responsible for causing the crash.

The letter notifies usually gives the date and location of the accident and the name of the person making the personal injury claim. Included in the letter is a direction for it to be forwarded to the liability insurance company of the person receiving it.

You may be wondering why the lawyer for the injured party doesn’t send it directly to the insurance company. An insurance policy, including the policy on your car, is a contract between the insured and the insurance company. The company will not accept notification of the accident from anyone other than the policy holder.

The notification letter sent by a personal injury lawyer typically concludes with a warning that unless the lawyer hears from the recipient’s insurance company or lawyer within a specified number of days, a personal injury lawsuit will be started. If you receive a notification letter, take the warning seriously, and contact your auto insurance company to tell them about the claim.

Car insurance and other types of liability insurance policies require that you notify the insurance company within a specific time from when you become aware of a claim. If you fail to comply or wait too long, the insurance company may refuse to provide coverage for the claim.

Fault- and no-fault laws

A personal injury lawyer may decide to start the legal process right away without sending a notification letter or without waiting to hear back from you or your insurance company. The notification letter is more of a courtesy than a formal requirement.

The laws in each state create its legal system and the process that people must follow to bring or defend lawsuits. For example, some states, such as Florida, do not permit a person injured in a car accident to sue for personal injuries unless they have a serious injury as defined under state law.

Florida is a no-fault state, so all drivers must carry at least $10,000 of personal injury protection coverage (PIP) as part of their auto insurance policy. When someone is injured in a car accident, their claim for payment of their medical expenses and lost wages must be submitted to their own insurance company for payment under the PIP coverage.

If you injured someone in an auto accident in Florida, their claim goes through their own insurance company first. They have the right to resort to the legal process and file a lawsuit only if they have a serious injury, which Florida law defines as an injury consisting of one of the following:

• Permanent and significant loss of a bodily function
• Permanent injury within a reasonable degree of medical probability
• Scarring or disfigurement that is significant and permanent
• Death

A person with an injury that qualifies under the law as serious may sue the at-fault party for damages, including recovery of compensation for pain and suffering. Florida is one of only 12 states with no-fault laws. The rest of the country follows fault rules.

When a person sustains injuries in a car accident in a fault state, they must prove that someone else was responsible for causing the crash. r compensation for medical treatment, lost wages, pain and suffering and other damages. Whether you are in a fault-state or have a serious injury in a no-fault state, there is a similar legal process.

Steps in the legal process

When a person who has been injured in a car accident consults a personal injury lawyer, the lawyer will evaluate the person’s description of the accident and the injuries to decide whether to take the case. A lawyer may initially take the case only to investigate to determine whether there is evidence of careless or reckless conduct by other parties who can be held responsible.

If there is evidence of fault, a personal injury attorney also may take into consideration the existence of car insurance and the amount of coverage available to pay the damages sought by the injured party. A lawyer may decide against taking on a case where the at-fault driver is uninsured or has only minimal insurance coverage and no assets to pay what the lawyer believes the claim is worth in a settlement or verdict after trial.

After a personal injury case is accepted, the car accident lawyer may decide to wait before starting a lawsuit. This may occur when the lawyer receives a response from the car insurance company insuring the at-fault driver and believes it can be settled without resorting to a lawsuit.

Sometimes, the car accident lawyer may not have a choice of waiting because of the statute of limitations. A statute of limitations is the time a person has to file a car accident lawsuit.

Each state sets its own time limit. For example, the time to sue to recover compensation for injuries from a car accident is four years in Florida, but it is only three years for car accidents in New York. If an injured person waited before deciding to seek legal representation, a lawyer may have to immediately start a lawsuit to prevent the client’s right to sue being lost by expiration of the statute of limitations.

The steps in the legal process of a personal injury lawsuit include:

• Filing a summons and complaint in court: The lawyer for the injured party, who is the plaintiff in the lawsuit, prepares a summons and complaint and files it in a civil court.
• Service on the defendant: A copy of the summons and complaint are served on the defendant, who is the person being sued.
• Defendant answers the complaint: The defendant must serve a written response, called an answer, to the complaint within the time established by state law, which is generally about 30 days. A defendant who does not answer the complaint is in default and loses the right to contest the court entering a judgment in favor of the plaintiff.
• Discovery: After receipt of the defendant’s answer, the parties engage in discovery that compels each side to furnish information about the case to the opposing party.
• Trial: Unless the case is settled, the case will be scheduled for trial once discovery is completed. At the trial, each side in the lawsuit has the opportunity to call witnesses and present evidence. A judge or a panel of jurors will weigh the evidence and decide the case. If the plaintiff wins, a judgment will be filed against the defendant. A win by the defendant results in the case being dismissed.

If you are served with a summons and complaint in a lawsuit, you need to immediately contact your auto insurance company to avoid defaulting by not serving an answer.

Role of the liability insurance company

Having someone come to your home and serve papers on you may leave you confused about your rights and what to do to protect them. One thing that you need to do right away is contact your car insurance company and provide them with a copy of the papers that were served on you.

The insurance company will have an attorney defend you in the lawsuit. If there is a settlement or a judgment, the company pays it up to the policy limits. For example, if the bodily injury coverage of your policy is $50,000, the company will pay up to that amount toward a settlement or judgment. However, if a judgment is for $100,000, payment of the policy limits by the insurance company does not eliminate the judgment. It only reduces it by the amount of the payment.

What does it mean to be judgment proof?

When someone is described as “judgment proof,” it could mean they do not own any assets that a creditor may seize and sell to pay all or part of the judgment, but that is not its only meaning. You can own assets and still be judgment proof because the assets that you own are out of a creditor’s reach because of an exemption.

In order to understand about exemptions, you must first know what happens when a personal injury lawsuit ends with a judgment filed against you in favor of the injured party. If you cannot pay the entire judgment, the plaintiff becomes a creditor with the right to seize your personal assets and income, including:

• Money on deposit in bank accounts
• Retirement accounts
• Real estate that you own

If you work, the judgment gives the creditor the right to seize a portion of the money you earn at through a wage garnishment.

Exemptions have been created by state and federal laws to protect certain assets and income from creditors. For example, Social Security benefits are protected through an exemption. Some state laws protect certain assets, such as the home you live in, from seizure and sale by creditors.

The best thing to do is arrange a consultation with an attorney to learn more about the rights you have under the laws in the state where you live. Many lawyers offer free consultations for you to get legal advice about your rights and how to protect them.

How to handle the financial consequences of a lawsuit

If you do not have insurance coverage for an accident or the coverage is not enough to pay all of the damages suffered by the plaintiff, your best option may be to negotiate a settlement. One way to encourage a plaintiff or their lawyer to settle a case is to show them documents to prove that you are judgment proof.

This becomes more effective when you have insurance coverage, but it is not enough to pay the entire claim. A plaintiff may be willing to accept payment of the policy limits now rather than wait months or even years until the claim results in a judgment, since there is no other money available from you.

When negotiating with a plaintiff, you may want to consider offering to pay something toward the judgment over time with a payment plan. If the plaintiff agrees to not seize property or take other steps to collect what you owe under the judgment, a payment plan could be a good way to settle the case.

Discuss your options with a lawyer to find one the plaintiff will likely accept. Even if it involves making payments from your assets, it may be worthwhile because you may be judgment proof now, but judgments in some states remain active for up to 20 years. A future improvement in your financial situation could end up benefiting the plaintiff.