People with judgments against them typically lack enough assets to satisfy what the court owes; wages, investments and any expected future assets may be subject to seizure until a debt is satisfied.
Many plaintiffs seek legal financing to cover expenses until a settlement or trial verdict has been rendered. But where do these funds come from?
Insurance Company
One of the key steps when it comes to suing someone is determining whether or not they possess money and assets. If they don’t, even if your judgment goes your way you won’t receive anything; even if they do have money they likely won’t give it directly or pay your lawyer; usually the judgment will be covered by insurance, which in the case of successful litigation is often paid by that party’s insurer; pre-settlement funding companies provide quick cash solutions as an option too.
Judgments
Plaintiffs in lawsuits often require defendants to pay them money to settle their legal disputes. If a defendant does not have enough funds available to pay off, courts can take measures to force them into paying, although judges cannot give money out straight or order defendants to find ways of earning or gathering together the amount due.
In most car accident cases, plaintiffs are reimbursed by their respective insurance company; this occurs because these companies typically carry policies covering such incidents. However, in certain circumstances the responsible party must bear their costs directly out of pocket.
Courts may grant money judgments in favor of plaintiffs if their evidence at trial is compelling enough, with both parties receiving copies of the judge’s ruling afterward. Unfortunately, however, courts do not collect on judgments awarded to individuals; individuals have up to 30 days from when their judge issued his/her ruling to file a Notice of Satisfaction of Judgment with them or appeal his decision if desired.
If the judge awards you a money judgment against someone, they may still possess assets to use to pay it back – for instance a bank or investment account could contain the funds. Furthermore, court may garnish their wages or place a lien on property such as their house or car – however social security payments and some forms of income protection prohibit garnishment of these amounts.
Many attorneys advise their clients to file suit even when the other side has no money available, believing they will have it soon enough. This strategy works because any unpaid judgment incurs interest charges every day it remains outstanding; while this might seem wise, this doesn’t guarantee you will actually collect what’s owed to you; indeed if they are currently broke they are considered judgment proof and you won’t see a dime of what’s due.
Defendants
Civil lawsuit remedies tend to be monetary in nature, which means if you win your case, the defendant must compensate you financially for your losses. Most often these individuals and/or companies carry insurance policies in order to shield them from liability.
Notify the defendant in writing that you intend to sue them formally. A process exists for this, such as hiring a professional service to hand deliver paperwork directly. They then have an opportunity to respond back in court by either disputing your allegations, raising defenses or filing counterclaims against you.
In cases where it is obvious that a defendant lacks sufficient income to pay their judgment, judges may grant what is known as a “Written Suspension.” This stay puts off payment until such time as they have sufficient resources or income available to pay back what has been owed – such as bankruptcy cases but can also apply against those without assets at all.
Settlements
Plaintiffs typically bring lawsuits in order to receive compensation for financial or emotional losses they’ve sustained, through either physical damage or mental anguish. When successful, courts may award a settlement that provides some cash compensation; though not necessarily binding, accepting it often means forfeiting further claims for compensation.
Money for lawsuits may come from both insurance companies and individuals, although usually, any judgments against defendants fall to them to pay. This holds true not only in personal injury and wrongful death cases but also class action lawsuits.
Class action lawsuits typically award the lead plaintiff a portion of the total settlement amount, as do their attorneys who represent all plaintiffs’ interests. Any remaining funds are usually distributed among all members of the class.
Lawsuit settlement loans and advance funding arrangements are relatively new forms of litigation financing. Although commonly known as lawsuit settlement loans, they should more accurately be viewed as the purchase of an interest in an award and should be seen as risking less than expected results in their court case.
Once a lawsuit has reached its final resolution, its judge will make decisions about how the award should be distributed. These may depend on laws and regulations such as Medicaid reimbursement for damage awards or fulfilling federal programs’ requirements; or it could even be up to attorney general/legislature discretion alone to decide. For instance, during the tobacco settlement case in Massachusetts the legislature used most of their money on children, families, and seniors while keeping some to cover legal costs/further litigation expenses – this decision by lawmakers was later reversed by many states’ attorney general/legislature has wide discretion when it comes to how distribution.