What to Do When a Defendant Appears Judgment-Proof

Posted on: 13 February 2019

When you sue a defendant directly for compensation for damages related to an auto accident, it's always a toss-up whether you'll actually be able to collect the compensation after you win. When defendants don't pay, oftentimes it's because they are indigent, meaning they have no money or assets you can confiscate to satisfy the judgment. At least, that's how it may appear on the surface. Here are a couple of things you can do if you're in a situation where the defendant in your case appears to be too poor to pay.

Look for Suspicious Asset Transfers

Personal injury lawsuits take a while to resolve, and it's not unusual for defendants who know they're going to lose to attempt to use the delay to hide money and assets to avoid paying the upcoming debt. This behavior can take a variety of forms, including moving cash from unprotected accounts to exempt ones and transferring property into other people's names, with the end result being the individual looks like they're too broke to bother trying to collect from.

Luckily, if it appears the defendant transferred assets with the express purpose of avoiding paying a debt, it may be possible to force the defendant to reverse the offending transactions or pay the equivalent amount the asset is worth. For instance, a defendant who transfers a vehicle into his or her daughter's name to avoid having it confiscated can be made to cancel the transfer or pay the plaintiff the market value of the automobile as a consequence.

It can be challenging to locate these suspicious transfers and prove the defendant attempted to commit fraud. However, an attorney can use a variety of tools—such as forcing the defendant to attend an asset disclosure hearing—to uncover any wrongdoing and ensure you get paid what you're owed.

Take Advantage of Lien Laws

A debtor can have some assets and still be considered judgment-proof simply because those assets may be protected in some way from debt collection by the law. For instance, the law exempts a certain amount of equity in a debtor's home. If the equity the debtor has is at or below the exempt level, you won't be able to confiscate the home and sell it to pay off the court judgment.

In this situation, an alternative option is to put liens on the debtor's property. Although you won't get any money right away, the debtor will be forced to pay off the lien when he or she eventually sells the property in order to transfer the asset to the new owner.

Be aware, though, that liens do expire (the time limit varies between states), so it may be necessary to renew the lien if it remains unpaid for too long.

For more information about collecting a court judgment or for help with your auto accident case, contact an attorney like those at Campbell Barnett PLLC.