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Collecting from an Indebted Personal Injury Defendant

After a lawsuit has resolved through trial a prevailing plaintiff often ends up with a judgment award. The judgment typically orders the defendant to pay the plaintiff a certain amount of money, perhaps with a certain schedule. But if the defendant is substantially in debt and can’t afford to pay the judgment, what should the plaintiff do? Court judgments are a type of debt. Like other kinds of legally recognized debt, they create an obligation upon the debtor to pay what is owed. Until the debt is satisfied, it remains in place. When the defendant has other substantial debts, such as a mortgage, student loan debt, or even other judgments, a plaintiff can end up in competition with other creditors of the defendant to recover what is owed. There are several strategies that a plaintiff can pursue in this circumstance. The first option is to file a judgment lien. In any case where the defendant has a financial obligation to the plaintiff that won’t be satisfied immediately at the conclusion of the lawsuit, a plaintiff should file a judgment lien against any valuable property of the defendant, such as real estate, car, or other valuable personal property. A lien is a public record that stakes a claim to the proceeds from the sale of the property subject to the lien and remains in place for up to six years. Another option is to hire a debt collector. Although the services of a debt collect cost money, they can sometimes shake loose payments that might otherwise go unpaid, as the defendant grows tired of being hounded or the collector identifies resources that the defendant hasn’t previously disclosed. A third option is to pursue wage garnishment. A wage garnishment is a formal court process that orders an individual’s employer to set aside a certain portion of the individual’s wages each month and send them to the creditor. For someone who is owed a significant sum, wage garnishment can feel like an especially small sum, but it can be better than nothing. The law firm of Greenman Goldberg Raby Martinez has represented clients in personal injury cases for over 45 years. We work hard to ensure that our clients are compensated as quickly and as efficiently as possible. For a free attorney consultation about your case, call us today at 702-388-4476 or contact us through our website.

How Personal Injury Judgments Fare in Bankruptcy

When an injured plaintiff sues a defendant in civil court to recover compensation for personal injury, the plaintiff is hoping to obtain a favorable judgment. The judgment may come about after a trial, or it may be the result of a negotiated settlement. Either way, a court judgment orders the defendant to do (or not do) certain things. In a personal injury context, the judgment typically orders the defendant to pay the plaintiff or the plaintiff’s creditors (insurers, health care providers, and so on) a certain amount of money. Financially speaking, the defendant becomes a debtor to the prevailing plaintiff and others who have incurred expenses on the plaintiff’s behalf during treatment of the plaintiff’s injuries. The plaintiff, in turn, becomes one of the defendant’s creditors. This debtor-creditor relationship remains until the judgment is paid in full.

Judgment liens and other creditors

A successful plaintiff typically is not the defendant’s only creditor. Most people in the United States have multiple debt relationships: auto loans, mortgages, educational loans, credit card debt, utility bills, and so on. Not all debt is created equal. Debt can be categorized in a variety of ways, but one of the more important distinctions is between secured and unsecured debts:
  • Secured debt is tied to certain tangible collateral. Car and home loans take the car or home as collateral. Credit card companies can require a deposit of cash collateral from customers with no or low credit. Lenders in such arrangements have a straightforward remedy if the borrower fails to pay: they simply repossess the collateral property and sell it to recover the value of their loans.
  • Unsecured debt is not tied to specific property. Most credit card debt is unsecured. For a credit card company, the remedy is to keep piling on late fees and charging interest.
A civil judgment is often secured by what is called a judgment lien. A judgment lien allows the plaintiff to make a claim against the defendant’s valuable property and sources of income until the debt is paid. For example, the plaintiff can file a lien against the defendant’s home or car, ensuring that as a legal matter the home or car can’t be sold without first satisfying the debt.

The bankruptcy option

Defendants who face an unmanageable debt load will sometimes declare bankruptcy. In the most common form of personal bankruptcy (Chapter 7), a debtor is forced to sell or surrender nonexempt property to repay as much of his or her debts as possible. Creditors typically get paid in order of their priority, and here is where a plaintiff can get unpleasantly surprised. Unless the defendant has a substantial cash or liquid investment pool to draw upon, senior lenders (mortgage lenders, auto lenders, even credit card companies) may take all the defendant is required to pay before the plaintiff sees much, if anything. If a judgment lien has been attached to exempt property (for example, a defendant’s primary residence) the lien may be removed as a consequence of the bankruptcy process. Plaintiffs who face this possibility need legal representation in the defendant’s bankruptcy proceeding to ensure that every effort is made to prevent the defendant from escaping their obligation through bankruptcy. In some cases (drunk driving incidents, for example) the defendant cannot escape financial responsibility through bankruptcy. In other cases the plaintiff must argue the case, often in contention with large lending organizations.

Talk to a personal injury attorney about your case

The law firm of Greenman Goldberg Raby Martinez has represented clients in personal injury cases for over 45 years. We help plaintiffs through every phase of their civil litigation, from pretrial strategy to post-judgment collection. If you have questions about how you can collect on your civil judgment, call us today for a free, confidential attorney consultation. We’re available at 702-388-4476 or contact us through our website.

How Defendants May Use Bankruptcy to Avoid Paying Judgments

Defendants in personal injury lawsuits can end up owing the plaintiff a significant amount of compensation, whether as part of a settlement or as a consequence of a court judgment. In simplified terms, the successful plaintiff becomes a creditor of the defendant. One concerns that successful plaintiffs may have is that defendants may seek to reduce or eliminate their debt obligation by discharging it through personal bankruptcy. There are several kinds of bankruptcy, which are named after the applicable chapter of Title 11 of the U.S. Code, also referred to as the U.S. Bankruptcy Code. For individuals, the two forms of bankruptcy are Chapter 7 and Chapter 13. The mechanisms and requirements of these two forms of bankruptcy are quite different.
  • Chapter 7 bankruptcy is for debtors who lack the income necessary to pay at least some of their debts. If the debtor is already barely staying afloat when the judgment comes down, Chapter 7 might be available. A Chapter 7 bankruptcy forces the debtor to sell off or surrender property for which there isn’t an exemption. The debtor uses the resulting proceeds to pay off as much of the debts as possible, leaving only a small, exempted amount for the debtor’s own use. After the debtor has paid what he or she can, the rest of the debts are discharged. At the end of the process if a creditor cannot be paid because there is nothing left, the creditor may be out of luck.
  • Chapter 13 bankruptcy is the option available for people who do not satisfy the debt-to-income requirements of Chapter 7. Chapter 13 is more favorable to plaintiffs because it does not result in debts being discharged for good. Instead, the Chapter 13 debtor is required to adopt a repayment plan that is compatible with the debtor’s income. A Chapter 13 repayment plan is overseen by the bankruptcy court and a trustee, and may last up to five years.
Both types of personal bankruptcy involve all of the debtor’s credit obligations, meaning the plaintiff’s award gets thrown in with other forms of debt, like mortgages and car payments. One consequence of this is that the successful plaintiff may end up behind other, higher priority creditors in the process. For example, if a mortgage lender has a lien on the debtor’s home, the home’s value may be out of the plaintiff’s reach. A personal injury plaintiff is a sympathetic creditor and may receive some discretionary priority from a bankruptcy court, but the law of secured debt can limit the size of the potential asset pool available to pay all creditors. Plaintiffs in drunk driving cases should note that bankruptcy law prohibits bankruptcy courts from discharging debts associated with injuries caused by drunk drivers. Such debts are on a list of nondischargable debt that also covers student loans, most taxes, and government debts. Bankruptcy is designed to ensure that the debtor does not come out of the process with nothing. The idea is that debtors get another chance to “start again.” For a personal injury plaintiff this can feel unfair, especially in a Chapter 7 bankruptcy case where the debt ends up wiped away. As a consequence, plaintiffs’ attorneys need to anticipate the ability of the defendant to pay as part of their legal strategy. For example, it may make strategic sense to enter into a settlement with provision for securing the debt voluntarily, so it is harder to discharge through bankruptcy. The law firm of Greenman Goldberg Raby Martinez has helped injured clients in the Las Vegas area recover compensation for over 45 years. If you have questions about your personal injury case, call us today for a free attorney consultation at 702-388-4476 or send us a request on our contact page.

Suing an Estate for Personal Injury Damages in Nevada

Suing an Estate for Personal Injury Damages in Nevada
Someone who is seriously injured by another person’s negligent or reckless behavior is hopefully able to recover compensation. But if the responsible person dies before a case is resolved, the injured person may need to sue his or her estate. In some ways an estate is just like any other defendant, but lawsuits against estates involve some special issues. At the most basic level, after someone dies their assets are generally used to pay off the deceased person’s debts, with anything left over going to the person’s heirs. Past this basic framework, however, an estate can be quite complicated. Here are a few potential issues a plaintiff may face:
  • Probate. When a person dies with assets that aren’t held in a trust their assets are placed into the administrative process of a probate court. The probate process is intended to provide an orderly way for creditors of the deceased person to make claims against the assets in an estate. The estate’s personal representative, who may be a family member of the deceased or the deceased’s lawyer, is responsible for notifying creditors of the estate about when and where hearings will be held to resolve claims.
  • Trusts. A trust is a type of legal entity that some people use to shield assets from estate taxes and, potentially, creditor claims. A common form of trust, the revocable living trust, does not protect assets from creditors. But high net worth individuals often set up more supplicated vehicles, like spendthrift or “domestic asset protection” trusts, which provide a more airtight protection against creditor claims on property left in the trust for a period of time.
  • Tight deadlines. Public policy demands that estates be settled reasonably quickly. That means that deadlines for making claims against an estate can be quite tight. For example, unless otherwise permitted by the court a creditor who receives notice of an estate going into probate has only 90 days from the date of notice to file a claim. NRS 147.040.
  • Restrictions on continuing lawsuits. A plaintiff against a deceased defendant must comply with all of the rules that apply to a creditor in probate. What’s more, a plaintiff in an ongoing lawsuit against someone who dies must show “good cause” for the lawsuit to continue against the estate in probate. NRS 147.100.
  • Other creditors. After someone dies there are often a range of creditors who will seek to claim a part of the deceased’s estate. Lenders for mortgages and education costs will have sophisticated help at their disposal to protect their interests. The injured plaintiff must have good representation to compete with these behemoths.
  • Fraudulent transfers. If the deceased person tried to shield assets from the injured plaintiff’s claim by giving them away—for example, by gifting a large chunk of money to a child—the plaintiff will need to bring the transferees of such assets into the case to seek recovery of the assets that, in legal terms, were fraudulently transferred (that is, transferred to avoid being subject to the plaintiff’s claim).
  • Out-of-state assets. Quite often someone who dies will own property outside of Nevada. Pursuing claims against those assets can involve working with local counsel in other states to ensure that local rules are satisfied.
Navigating these and other complex issues requires careful work by the lawyers who represent the injured plaintiff. Greenman Goldberg Raby Martinez has helped clients get compensation in personal injury cases for over 45 years. If you have been injured and would like to explore your legal options, reach out to us today. For a free attorney consultation call us at 702-388-4476 or contact us through our website.

The Collections Process Following A Successful Lawsuit

The Collections Process Following A Successful Lawsuit
Successfully suing the person or business who is responsible for causing a personal injury takes time and expertise. For cases that don’t settle but instead go to trial, success for the plaintiff means obtaining a court judgment against the defendant. In a personal injury case the court order typically requires the defendant to pay the expenses associated with an injury—medical bills, lost earnings, and other costs that have been or will be incurred by the plaintiff during the recovery process. But a court’s judgment is just a piece of paper. Collecting on a judgment often requires more.

A court judgment is not always a remedy

Many injured plaintiffs are often disappointed to learn that a court’s favorable ruling doesn’t immediately resolve the financial challenges associated with their injuries. Unless the defendant raises a valid appeal, a court’s judgment is a binding order against the defendant. The plaintiff has become a creditor of the defendant, similar to a lender. But some defendants refuse to pay, perhaps because they lack the financial resources to do so. When that happens, the plaintiff is responsible for ensuring that the judgment is enforced. The court will not, by itself, take further steps to force the defendant to pay.

Strategies for collecting on a judgment

In Nevada a prevailing plaintiff has six years from the date of the court’s order to enforce a judgment. If enforcing the judgment is taking longer than six years the plaintiff can request an extension of time. NRS 11.190(1)(a). There are several paths a creditor can pursue to recover on a judgment in Nevada.
  • Wage garnishment. In Nevada creditors can obtain a court order to garnish a delinquent debtor’s wages (a so-called writ of garnishment). A wage garnishment order requires an employer to withhold money from the debtor’s paycheck and instead pay it to the creditor. State law places a strict cap on how much of a person’s wages can be garnished: 25% of the debtor’s disposable earnings, or the amount by which the debtor’s earnings exceed 50 times the federal minimum hourly wage, whichever is less . NRS 31.295. Of course, in many situations a defendant will not have earnings sufficient to compensate the plaintiff for anywhere close to the amount of a judgment.
  • Seizing property. A creditor may also ask the court to issue a writ of execution against certain property of the defendant, which allows the creditor to take possession of the property. A writ of execution must specify the property to be seized, such as cash in a certain bank account, a certain car, or other property. Writs of execution are subject to a range of rules and procedures, in part to ensure that a bank or other institution can rely upon them when handing over an individual’s assets. They are also subject to a wide range of exceptions to ensure that the debtor isn’t left homeless or unable to provide for dependents. See NRS Chapter 21.
  • Filing property liens. Another option for creditors is to file liens against certain assets of a debtor. A lien places a publicly available claim on property, such as a car or a piece of real estate, that must be cleared before the owner can sell the property. It can be an effective backstop against a debtor who owns a home, because the lien will complicate selling the home or using it as collateral on a loan.

GGRM helps clients get the compensation they deserve

For over 45 years the law firm of Greenman Goldberg Raby Martinez has represented injured clients in the Las Vegas area. We are passionate about helping our clients get back on their feet after an injury. That often involves taking steps to enforce a judgment. If you have been injured or you’re having difficulty collecting on a judgment, call us today for a free attorney consultation at 702-388-4476 or send us a request on our contact page.