What Can I Do If the Responsible Party Can’t Pay?
You are the victim of an accident. You filed your claim, went to small claims court and won a judgment in your favor. You might think your case is over and you will now receive the money needed to pay your bills and move forward. Unfortunately, plaintiffs in small claims courts do not automatically receive compensation after winning judgments. Defendants may refuse to pay or say they do not have the means to do so. Learn your legal rights in these situations to optimize the chances of obtaining the money you won.
Refusal to Pay: Permission to Collect
In some cases, the responsible party for your accident can pay but refuses to do so. The defendant might wish to make financial recovery as difficult for you as possible. In this case, you must receive a written order from the court that permits you to collect. The name of this document varies by court: writ of execution, writ of attachment or writ of garnishment. With this document, you will have the power to force the defendant to pay you through a few different means.
- Wage garnishment. This automatically deducts a portion of each of the defendant’s paychecks (typically up to 25%) and sends it to you to pay off the debt.
- Bank levy. If your lawyer knows the defendant has money, a bank levy (an order from a court) could allow you to seize part of the defendant’s bank account to pay the judgment.
- Payment installments. The courts can order the defendant to pay you in installments if he or she refuses or cannot pay you the entire sum upfront.
- Permission to collect could entitle you to place liens on the defendant’s property, such as a home or vehicle. This could pressure the defendant into paying you. If not, the lien can lead to the repossession of the property to pay the judgment.
The right choice for a defendant who has the money but refuses to pay will depend on your situation and the defendant. A Virginia personal injury lawyer could help you choose the best option for your case. A lawyer can also help you obtain the court order for permission to collect after you win a judgment.
Inability to Pay: Review Other Options
In most cases, a defendant’s inability to pay is a nonstarter for a lawsuit against that party. A plaintiff’s attorney typically will not enter a claim against a defendant who financially cannot afford to pay a judgment award. Investigating a defendant’s ability to pay prior to filing a lawsuit can prevent you from winning a judgment that will remain unpaid due to the defendant’s inability to pay. If you do proceed with a lawsuit against a defendant that does not have means to pay, a positive judgment could result in no payment if the defendant declares bankruptcy – or a long, drawn-out process for obtaining your money in installments.
In most cases involving a defendant who cannot pay, a lawyer will instead seek recovery through other means. The lawyer might bring a claim against a third party instead, for example, such as the defendant’s employer, a product manufacturing company, a property owner or a government agent. A third-party claim against a higher-earning defendant might be possible depending on the circumstances of the accident. This can improve the odds of the defendant being able to pay a judgment.
If the responsible party cannot pay and third-party liability does not exist, a first-party insurance claim might be the only other option. After an auto accident, for example, if the other driver does not have insurance, your own insurer might pay your damages instead. You will need the correct type of insurance for this option to be viable. Work with a personal injury attorney at the start of your case for an overview of your options for financial recovery. A lawyer can explore wage garnishment, installment plans, a third-party suit and/or a claim against your own insurance company for the payment of a judgment award.