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Collecting Damages from an Uninsured Defendant

The operation was successful, but the patient died.  This is how a litigant feels after obtaining a judgment against an uninsured defendant from whom it is impossible to collect. When settling a personal injury claim with an insured defendant or a self-insured entity, such as a government entity or a wealthy company, the plaintiff usually receives the settlement check within two or three weeks.  When settling with the vast majority of uninsured defendants, this does not apply.

Most uninsured defendants are judgment proof. This means it is nearly impossible to collect in full, or perhaps even in part, on a judgment. If the person you have taken a judgment against does not own real estate, own valuable personal property, have a large bank account, or have a salaried job, your collection efforts may prove not only fruitless and deeply frustrating, but also expensive. You and your client can spend a great deal of time and money trying to collect on such a judgment. The expression, “throwing good money after bad,” is apt. Most lawyers will not even take a personal injury case unless the defendant is insured or has substantial collectible assets.

Even if the injuries are very serious and the liability clear, you win the battle but lose the war if you cannot scoop up the pot of gold at the end of the rainbow. Right from the start, you should seriously consider the wisdom of pursuing such a case. Ending up with an uncollectible judgment only adds insult to injury.

If you have a judgment against an uninsured individual, what should you do to try to collect? The best hope for collecting money is when the defendant is the sole owner of real estate. You may be able to take two different steps against the property. First, you can execute on this judgment and force a sheriff sale of the property to satisfy it. Realize that you may be putting a person on the street. Not everyone has the stomach for forcing a sheriff sale on a defendant’s home. If you do, you may be able to collect the money from the sale, up to the amount of your judgment.

Second, if you record your judgment, it will appear on any title report for the property. When the defendant goes to sell or refinance the property, your judgment will act as a cloud on the title. The defendant may need to satisfy the judgment (pay the damages) before the cloud is lifted. He or she may not be able to sell or refinance the property without paying off the judgment. Take proof of your judgment to City Hall and record it at the Recorder of Deeds. This may be referred to by another name in your city.

It may be impossible to take these steps if the defendant is only a co-owner of the property. Since someone other than the defendant is also an owner, and since you do not have a judgment against that co-owner, you may be unable to force a sheriff sale or cloud the title. Check the laws in your state.

If the defendant is the sole owner of a car, expensive jewelry, or other valuable property, you can try to force the sale of those assets to satisfy the judgment. It is easy to check with the Department of Motor Vehicles to determine if the defendant owns a car. If the case has significant value, it will be worth sending the sheriff out to take possession of it. The car will be sold at sheriff sale and the proceeds will go toward satisfying the judgment.

Determining whether the defendant has other valuable property will take some sleuthing. It depends on how hard you want to work, how good a private investigator you hire, and how much money you want to spend chasing down this property. You can send interrogatories to both the defendant and to any bank at which you suspect he or she may have an account. See Appendix 20 of my book, Winning Personal Injury Cases, for a sample set of interrogatories that can help you locate collectible assets.

If the defendant refuses to reply, you can file a discovery motion asking the court to order him to reply. See Appendix 11 for a discovery motion you can adapt to this situation. See Appendix 21 for a sample set of interrogatories that can be sent to every bank in the defendant’s town. These interrogatories will help determine whether the defendant has money in these banks.

If the defendant has a salaried position, you may be able to attach wages. This forces the employer to send you a portion of the defendant’s paycheck every week until the judgment is paid off. Each state has its own rules and procedures for this.

Another useful collection tool that some states offer involves car accident cases. If you obtain a judgment and the defendant refuses to pay, you may be able to have their driver’s license suspended. The defendant will be required to show proof the judgment has been paid before the suspension is lifted. I have found this to be a useful tool.

If the defendant offers to pay the judgment in monthly installments, keep copies of the checks you receive. If the payments stop, you can execute on the bank account. The checks will identify the bank and account number. Imagine the look on the defendant’s face when he or she attempts to withdraw money and finds that the account is empty. Justice!!

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