accident - lawsuit

59 Replies

I got in a car accident several months ago. I was found at fault, and my insurance only covered the minimum which is around $20k, but the person claims she needs surgery and requires $200k , she's getting a lawyer to sue. I was already served. The insurance company gave me a defense lawyer. I want to know

1) I have a house , i bought a few years ago i dont know how much equity i have.. i have no money at all just an investment house and my primary resident... if she wins can she force me to sell my investment house? How does it work, can they really force you to sell your house or will they just put a lein?

Have you asked your home insurance company whether it covers (some or all of the) liability for the accident? Your home insurance may cover some of the liability beyond what your auto insurance covers. 

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1. Can they foreclose on a house that I make regular payments on? Or only if i stop making payments on the house and the house goes to forecloser they can get paid... 

I thought they a lien can only be satisified if i sell the house, refince or if the house goes into foreclosure.. so if i never sell the house, never refince and always make regular payment can they still foreclose on my house?

@Sarah Jones  When you say your insurance only paid out the minimum but gave you a lawyer for defense, I assume you mean that the claim hasn't yet exhausted the limits of your policy.  If that is correct, then you're not at the end of the road yet.  That's the good news.

The bad news is that the rules governing the collection of settlements from auto accidents tend to favor the victim.  Those rules are state-specific, so your best bet is to talk to your lawyer (or agent, if you have trouble reaching the lawyer).  This is really something you should seek professional advice on

1. the limit is $20k , we have exhuasted the limit already. They want more than $20k. 

2. i tried legal counsel but i dont have money to hire legal counsel so i am using what progressive gives. 

I am in california. so still have questions that are unanswered..

1. Can they foreclose on a house that I make regular payments on? Or only if i stop making payments on the house and the house goes to forecloser they can get paid...

I thought they a lien can only be satisified if i sell the house, refince or if the house goes into foreclosure.. so if i never sell the house, never refince and always make regular payment can they still foreclose on my house?

Yes, the plaintiff can foreclose on your property. 

 If the plaintiff sues and gets a judgment, they will record the judgment in the county where you own property.  So, in that way the judgement will become a lien. A lien would need to be paid or settled when you refi or sell.  

The plaintiff and her attorney can choose to foreclose on their judgment/lien.  To do so they go through whatever the legal process is in your state to force the sale and foreclose on your property, usually a sheriff's sale via public auction.  This has nothing to do with any mortgage you have and does not matter if you are current or not.  However, the plaintiff's lien would be in junior position, meaning the lender gets paid first.  So if the property is sold at sale, the lender gets paid, and the remaining proceeds would go to the lien holder (up to whatever they are owed).  Any overage over that would go to you.

Do you have equity in these properties?  If so, how much.  If not, it is very unlikely that they would try to foreclose on the property. 

If you have been served, get yourself to an attorney immediately.  An experienced defense attorney will be able to help you strategize a possible settlement with the assets you do have.  And will have opinion as to the merits of the plaintiff's case.  

I suspected you were in California when you said your insurance liability amount was only $20K.  This happens here all the time.  We buy the minimum liability because it's allowed by law and then it's not even close to what's needed.  If you have assets, like an equity in a house(s), this is a bad practice.  At this point, the plaintiff and their attorney are just getting started trying to figure out what assets you have.  If they believe you have two properties in CA, they may think you have property elsewhere and that you may have cash or other assets to possibly settle the claim. 

Again, you need an attorney to help you assess the merits of the plaintiff's claim (as in were you at fault, the necessity of the medical treatment she needs, her pain and suffering, etc.). If you can't afford one, you may have to consider legal aid.  However, they will verify your income and assets and request that you pay what they decide you can afford.   

The insurance company gave me a defence attorney.. i dont know if he is any good, he is verifying all their claims and seeing how much medical treatment they actually need. So he is doing part of his job. He doesnt know anything about asset protection which is very bad.

The plaintiff want as much as $200k, I have $0 in my bank account.. I have a job that is say $4k a month. The investment house might have some equity, the second house (owner occuppied has no equity .. i just bought it) 

1. I dont have to give the plaintiff anything but i was going to show them i have no money in the bank account...  hoping they will settle for 10k , do you think if i show them i have no money is a good idea? (they might go after the house with the equity)

2. also if they do win the case and get a judgement, will that stop me from buying houses in the future? will judgement on old houses stop me from buying houses in the future. 

If you cannot afford another lawyer besides the one the insurance company appointed you're stuck.  Speak with that attorney and follow their advice.  I would recommend not even speaking to the plaintiff or their attorneys without yours being present.   Best if ALL communications is between the attorneys.

Yes, this may absolutely affect your future.  If they win, say, a $200K judgement it will be as if you've taken out a $200K loan.  OTOH, if you truly have no assets, and it sounds like that may be the case, then they're not going to get anything anytime soon.  Bankruptcy might be an option.  Again, you will need to discuss this with your attorney.

I've been involved indirectly in a lawsuit like this.  This are very slow moving processes. This might go away (the situation I was involved in did) or might get resolved but it is likely to take months and months.

I have some equity in the investment house is what im worried about, since it is investment.. it is not protected by homestead..  so they might try to foreclose on the house to get at the equity. 

idont want to declare bankrupt becuase im a real estate investor and plan on buying more houses in the future. 

1. i was going to ask them to settle for $20k from insurance + $8k from me... and send them my bank statement that i have no money.. you think this might help? 

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Speak to your attorney.  Do what he says.  Do not send them anything or communicate with them in any way without your attorney's approval.  Do not make any settlement offer without your attorney's involvement.  There is a chance this might just go completely away, so don't be too hasty to make an offer.

The attorney they gave me sort of suck. He think i might owe more, just worrying about worse case and what the best thing to do with an attorney that does not know how to protect asset.. he told me to get an asset attorney and (he is only defense). i will listen to him.

Any other advice you guys can give would be great thanks again everyone... 

Sarah, 1. stop posting information there. You might say something that can go against you. 2. And this goes for everyone, think about a personal umbrella policy to cover you. 

The other advice I have, in addition to @Jatin Shah  excellent advice is to get your own attorney.  Scrape up the money somehow, but without your own attorney you run the risk of being railroaded by a contingency based attorney. 

And buy higher limits on your car insurance.  You won't be able to get the umbrella policy with $20K liability limits on your vehicle.  State Farm required I raise mine to $500K in order to get the umbrella policy.  As you're finding, a $20K policy is only slightly better than no policy at all.

Whatever you do, don't even think about talking to the plaintiff or his attorney.  only speak to your attorney.  If the damages are more than policy limits as here, you are responsible for the remainder.  There are special rules on what debts are and are not dischargeable in bankruptcy. Having worked for many years for a property & casualty insurance company, we saw this situation almost daily.  People being cheap with the minimum policy and no umbrella policy   When sued, the company paid what they were legally required to pay, and the rest is on the defendant (you).  If your current assets (investment house) only covers part of the judgment, you are still responsible for the remainder.  As someone mentioned, California is very pro-victim.  Legal aid is a possibility, if you qualify.

Already raised my insurance levels but that only helps with new accidents not the old one... thanks for all the advice they really help.. the more i know the better. already know their attorney can search .. not using my real name.. everything is different numbers etc.. 

you guys all made good points.. anything else you can think of is great..  hoping for the best ..planing for the worst 

Your defense attorney may not know much about asset protection, but he should know and understand enough about where you stand financially and asset-wise to determine if you have anything you can/want to offer in a settlement.  Let him know you may be interested in a settlement and what you think you can do.  Then, if he thinks it advisable, let him present a possible settlement to the other side.  Just so you know, I've seen a plaintiff accept as little as $10K in addition to the insurance insurance payout.  Same injury, btw.  Knee injury with no surgery needed or recommended.  But he then was advised by an attorney to have  surgery as that was the best way to get the maximum amount of liability payout from the insurance company.  So he got $30K from the insurance (his attorney got 1/2) and then he settled for an additional $10K from the defendant (driver). 

You may be able to get out of this with a settlement that you can live with.  Just because the plaintiff is suing, doesn't mean they expect to get $200K. But stay the course with your attorney and do not make any contact with the plaintiff or their attorneyon your own.

You don't need an asset protection plan as you apparently have no equity to strip or move. You don't even know how much, if any, equity you have in your two houses. Your first homework assignment is to find that out.

I could never understand why people only buy the minimum insurance coverage. Remember just because you don't have equity in your home a smart lawyer will still advise to get a judgement and put a lien on your home and the person will just sit back and wait because home prices will go back up very soon. And please don't lie about your assets or anything because California lawyers are good at getting you to give a deposition. 

Joe Gore

Just had this recently happen to me, and luckily it ended up going away. However, you stated you have a job, if they win judgement they can garnish your wages for up to 25% until the judgement has been paid. Lastly, the best advice I got if it went to court(and I lost), was to file bankruptcy to avoid paying the judgement.

For the future and for anyone reading, I second everyone else's previous statements. Raise your limits, and get an umbrella policy! It's worth the piece of mind, and very little out of pocket every year!