If another driver is suing you for a car accident, but you don’t have the money to pay a judgment, it’s essential that you understand how car accident lawsuits work, your legal rights, and the options available to both you and the other party. Depending on the circumstances of the case, you may not end up having to pay anything to the other driver, even if the court finds you at fault for the accident. At Kreger Brodish LLP, we understand your concerns and can prepare you for what to expect if a driver files a lawsuit against you after a car accident so you don’t feel blindsided or overwhelmed.
Understanding Lawsuits and Judgments in a Car Accident Case
In North Carolina, the first source of compensation for injured parties after a car accident is a claim with the at-fault driver’s liability insurance policy. If you were responsible for the other party’s injuries and your insurer denies their claim or doesn’t agree to a settlement, that party may file a lawsuit against you to recover compensation.
If you are found to be at fault for the accident and liable for the other party’s damages through the lawsuit, the magistrate or judge overseeing the case will issue a judgment. This judgment doesn’t take into consideration what you can afford to pay. Instead, it only considers the plaintiff’s losses.
However, just because another party files a lawsuit and a judgment is issued against you, that doesn’t mean you will have to pay out-of-pocket for their damages.
What Assets Can I Lose in a Car Accident Lawsuit?
If the court awards the other party an excess verdict and you cannot pay for it out of pocket, the court could authorize the other party to seize your personal assets to satisfy the judgment. This could include bank accounts, specific real estate holdings, vehicles, and other valuable assets. You might even need to surrender a portion of your future wages, commission earnings, or tax refund payments if you do not have tangible assets to satisfy a judgment in the present – a process known as garnishment.
What Assets Are Protected from a Lawsuit?
Although you are on the hook for covering the other party’s financial losses if they win against you in court, certain assets are exempt property and are protected from seizure. In North Carolina, exempt properties typically include your up to $35,000 in equity for your primary home ($60,000 for owners age 65 or older) and $3,500 for one vehicle. There are also exemptions for health aids, certain financial accounts, individual retirement accounts (IRAs), and life insurance policies. You have the right to notice to claim these exemptions so they are not confiscated from you during the legal process. The court cannot force you to sell these assets to pay the other side.
What Happens If Someone Sues Me for More Than My Insurance Policy Limits?
All North Carolina drivers must carry liability insurance. This insurance covers the damages accident victims suffer because of your negligence. The minimum insurance required by the state is $30,000 per person and $60,000 per accident in bodily injury liability coverage, plus $25,000 in property damage liability coverage. This might sound like a lot, but medical costs may pass these minimum coverage amounts if the accident results in significant injuries. You can’t force your insurance company to pay more than your policy limits.
If expenses exceed your insurance policy’s limits, another party could sue you to recover compensation for their losses. If the court finds you liable for causing the accident, it could award the other party financial compensation above and beyond the limits of your insurance policy.
In this scenario, you would have to pay for the other party’s financial losses out of your pocket. However, negotiating a settlement or declaring bankruptcy could be viable options if you genuinely cannot pay.
Should I Respond to a Lawsuit If I Have No Money?
Yes. You should always respond to a lawsuit, especially if you don’t have the means to pay a potential court judgment. Responding to a lawsuit means you have a fighting chance to protect your rights and tell your side of the story. Failing to respond can result in a default judgment against you, meaning you would automatically lose the suit. If that happens, you become responsible for paying the other individual. You have no voice and no opportunity to defend yourself if you refuse to participate.
What If I Can’t Afford to Pay?
If you can’t afford to pay the judgment, you may not have to worry because your insurance company is obligated to cover the amount up to your policy limits. Under North Carolina law, all drivers must have the following amounts of liability coverage at a minimum:
- $30,000 per person for bodily injury
- $60,000 per accident for bodily injury
- $25,000 per accident for property damage
You may only be personally liable for the other party’s remaining damages if they exceed your policy limits. If that happens and you cannot pay the remaining amount, the county sheriff may seek non-exempt assets to sell.
The good news is that even if you are unable to pay the judgment, you cannot be arrested for nonpayment, and your wages will not be garnished.
Possible Legal Defenses and Options
If you are being sued for a car accident but have no assets, there are still some options available to you. The first is to show that you were not at fault for the accident by providing supporting evidence. This evidence may include eyewitness statements, traffic camera footage, and expert testimony, all of which a car accident lawyer can help you collect.
Your insurance company may also settle your case before it goes to trial. And if it does, it will likely have the other party sign a limited release form, releasing you from all other liability.
How Can an Attorney Help?
If you have been sued following a car accident in North Carolina, an attorney can mount a strong defense on your behalf, represent you in court, and protect your rights.
