It may be worth suing someone with no money, but only under specific circumstances. For instance, suing someone with no money can be worth pursuing if the defendant has assets or insurance. Even so, you should carefully consider your options before making a decision.
More specifically, a defendant who lacks assets or income that is sufficient to satisfy a judgment is often described as “judgment-proof.” This reality raises important considerations for anyone thinking about pursuing a lawsuit against them.
Is the effort, expense, and time involved in litigation justified when the defendant does not have the means to pay out a potential award? Let’s look more closely at the outcome of suing people who cannot pay and how personal injury pre-settlement funding might apply to your situation.
What Does “No Money” Mean in Legal Terms?
When people say someone has “no money,” it can mean various things in legal and financial contexts. A judgment-proof individual might have:
- No significant bank accounts or cash savings
- No valuable personal or real property
- No stable employment or income source
- Assets that may be exempt from collection under applicable laws
- Income below the level needed to garnish or levy
Understanding these nuances is important because even a person who appears to have no money on the surface may have exempt assets. They might also have protected income that not only complicates collection efforts but also shields certain resources from creditors.
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Common Asset Protections in the United States
Even when a defendant appears to have limited financial resources, certain laws are in place to protect specific types of property and income from creditors. These protections exist in every state, though the details and dollar limits may vary based on the specific area in question.
These are examples of common asset protections across the nation:
- Primary residence protections: Many states offer a homestead exemption of some kind to shield part of the equity in a home from collection.
- Retirement accounts: Pensions, 401(k)s, and IRAs are generally safeguarded under federal and state laws.
- Public benefits: This includes Social Security, disability, and unemployment, all of which are often exempt from garnishment.
- Essential personal property: From household goods and modest vehicles to tools that are needed for work-related tasks, these are typically protected assets.
- Income limits on wage garnishment: These restrict how much of a person’s paycheck can be seized.
These exemptions mean that a defendant might legally own property or receive income, yet those resources could still be out of reach when it comes to collection efforts.
Furthermore, for plaintiffs, it is important to understand that a judgment does not automatically equal recovery. Collection depends on whether or not the defendant’s assets are both available and non-exempt.
Assessing Collectibility Before Filing a Lawsuit
Before initiating litigation against a defendant with limited resources, conducting a thorough investigation into their financial situation is advisable. This assessment includes:
- Reviewing public records for property ownership
- Investigating employment history and income streams
- Examining bank accounts and other liquid assets
- Checking for outstanding liens, judgments, or bankruptcy filings
Plaintiffs may also use discovery tools during litigation to obtain financial information from defendants. However, discovery can be costly and time-consuming, so it is often preferable to perform preliminary research before filing a complaint.
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The Costs of Litigation and Financial Risk
Suing someone is not without cost. Even in cases where the plaintiff has a strong claim, legal fees, court expenses, witness rates, and time investment costs can add up rather quickly. Thankfully, contingency fee arrangements are common in personal injury cases.
As such, attorneys may advance many of these costs, but this does not eliminate the inherent financial risk. If the defendant is judgment-proof, the risk is that the plaintiff may win the case but never collect the awarded damages.
In some cases, legal fees may be recoverable from the defendant, but when the defendant has no money, these amounts often remain unpaid. For plaintiffs without deep pockets or alternative means of financial support, this potential outcome can be a major deterrent.
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Strategic Reasons to Sue Even if the Defendant Has No Money
Despite the financial challenges of suing someone who has no money, there are situations where suing them anyway can still be worthwhile. Here are examples of strategic reasons why this might make sense for you:
- Preserving legal rights
- Setting a legal precedent
- Encouraging settlement or negotiation
- Establishing liability for insurance or third parties
- Enforcing non-monetary remedies
Plaintiffs must carefully consider these factors in light of the circumstances of their case.
Contact Pegasus Legal Capital ASAP for Pre-Settlement Funding if You Decide to Sue Someone
If you decide to move forward with a lawsuit, you shouldn’t have to worry about how to cover your expenses while waiting for your case to resolve. That’s where Pegasus Legal Capital comes into the picture.
Since 2007, we’ve been providing plaintiffs just like you with reliable pre-settlement funding across the country. We’re here to help you stay financially secure throughout every step of the legal process.
When you choose us as your pre-settlement funding provider, you’re choosing a partner that is committed to helping you bridge the gap until your case concludes. Reach out today to learn how we can provide the support you need while you pursue the compensation you deserve.
Your pre-settlement funding consultation is free — contact us today!