What You Stand to Lose in A Lawsuit
Do you find yourself in a lawsuit? Are you wondering what can be taken from you if it does not go in your favor? There are several assets that you can lose, but on the bright side, there are a few ways of protecting yourself. Some of the items that you can lose include your car, home, or life savings. Losing a case means that you have to disclose all of your assets. Accident liability lawsuits are widespread, and you stand to lose almost all your assets. Here are some of the assets that can be taken from you.
If you face a lawsuit, you risk losing your home, especially if it’s a second home. If a lien is filed against your home, you can decide to sell the house to settle the lien. Depending on which state you are in, your house can be protected under homestead exemptions. Another way your house can be protected is as if it is owned by married couples who each have an undivided interest.
Depending on the state you are in, you can set up an amount on your car as an exemption from garnishment. The car can be taken away from you if it's free and clear of all debts and the value is more significant than your exemption. However, the process is more complicated when there are loans on which the car is the collateral. People who are disabled and the elderly are allowed a higher exemption in some states.
You stand to lose your life savings in a lawsuit. There are a few exemptions like IRAs and 401k protected under the Employee Retirement Income Security Act of 1974. However, you can still lose a part of your Individually held IRA since they are not entirely exempted from bankruptcy.
Some attorneys may ask for the remaining assets that you have, including partnership agreements, checking and saving accounts, contents of all safety deposit vaults, and records of partnerships. Other assets that you may lose include titles to your property, real estate, trusts, jewelry, checking and savings accounts, and personal property.
Assessing your Assets
You might be wondering how the court knows about your assets. The court usually holds an asset hearing where a creditor asks you questions under oath to determine your ability to pay. You will also be required to surrender all the documentation about your assets.
An asset hearing is a mandatory failure to which a warrant for your arrest is issued. This is usually followed by another hearing where the creditor can ask for a cash-only bond equivalent to the amount you are being charged with. You can either pay the bond or remain in custody or plea to the judge to lower the bond.
A creditor can request a writ of assistance if they are under the impression that you have additional assets that can be sold. In this case, the police may follow you home to check and seize non-exempt property. It is not advisable to hide your asset as the inspection is usually thorough, and any hidden assets are auctioned off.
Are your Personal Assets Exempted?
The answer is no, but most personal injury lawyers do not go after personal assets. They mostly go for insurance funds. In the rare circumstances that they go for your assets is when dealing with a catastrophic injury that results in blindness, paralysis, severe burns, amputation, lifelong disability, or death. Another instance where lawyers might come for your asset is when there is a considerable difference between your assets' value and liability coverage.
Using Insurance to Protect Yourself
Liability insurance offers a way for you to protest assets that you can lose in a lawsuit. If you accidentally cause property damage or injuries, the insurance will cover the costs. It covers the bodily injury, property damage, the costs for defense for the lawsuit, and personal injuries such as slander or libel.
This insurance is essential as it can help you save a lot of your assets if you are ever in a lawsuit. They only cost few dollars per month but can save you hundreds of dollars in the long run. However, there is still a chance that you may have to pay for injuries and damages even with liability insurance.
Umbrella insurance offers more coverage, especially if you want to protect particular assets. It offers more protection to your assets than liability insurance.
The best way to protect your assets is through liability coverage. If you file for bankruptcy, you may still find a way to overcome a lawsuit. The fact that you can lose almost all of your assets doesn’t necessarily mean that they will be taken.
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