COLLECTING 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 uninsured defendant or a self-insured entity, such as a government entity or a wealthy company, it is almost always a matter of weeks between settlement and receipt of the settlement monies. Such is not the case when settling with the vast majority of uninsured defendants.
Many, if not most, uninsured defendants are judgment proof. This means that it is next to impossible to collect in full, or perhaps even in part, on a judgment against such a defendant. If the person you have sued and taken a judgment against does not own real estate, valuable personal property, such as a car or expensive jewelry, does not have a large bank account or a salaried job, your collection efforts may prove not only fruitless and deeply frustrated, but also expensive.
You and your lawyer can spend a great deal of time and money trying to collect on such a judgment. The expression, throwing good money after bad, often describes this process. 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. You should seriously consider right at the outset 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? While collection law varies from state to state, the best hope for collecting money in such a case is when the defendant is the sole owner of real estate. You may be able to take two different steps against this property. First, you could try to execute on this judgment and force a sheriff sale of the property to satisfy the judgment. Realize that you may be putting a person out on the street if you do so. 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, that is, pay you for your damages, before the cloud is lifted. He or she may not be able to sell or refinance the property without paying off the judgment.
If the defendant is only a co-owner of the property, it may be impossible to take these steps. Since someone other than the defendant is also an owner, and since you do not have a judgment against that co-owner, you may not be able to force a sheriff sale or cloud the title on this property. Check the laws in your state to be sure of this.
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 in order to satisfy your judgment. It is easy to do an investigation through the Department of Motor Vehicles in order to determine if the defendant owns a car. If that car has 12 to 14 for documents that may be useful in obtaining the sheriff’s assistance in executing upon the defendant’s real estate or personal property.
Determining whether the defendant has other valuable property is going to take some sleuthing. It really depends on how hard you want to work at this, how good a private investigator you hire, and how much money you want to spend chasing down this property.
One step you can take is to send Interrogatories to both the defendant and to any bank at which you suspect he or she may have an account. See Form 12 for a sample set of Interrogatories that you can send to the defendant. These Interrogatories can help you locate collectible assets.
If the defendant refuses to reply, you will need to file a Discovery Motion asking the court to order the defendant to reply. See Form 6 from my book for a Discovery Motion that you can adapt to this situation.
See Form 13 from my book for a sample set of Interrogatories that you can send to every bank in the defendant’s town. These Interrogatories will help you determine whether the defendant has money at these banks.
If the defendant has a salaried position, you may be able to attach his or her wages. This forces his or her 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 type of action.
Another useful collection tool that some states offer involves car accident cases. If you obtain a judgment in such a case and the defendant refuses to pay, you may be able to get his or her driver’s license suspended. The defendant will be required to show proof that the judgment has been paid before the suspension is lifted.