Personal Injury Judgments: Winning and Collecting Can be Two Very Different Things
Now that you have gone through the legal proceedings and obtained a judgment for your damages, does payment follow automatically? Not necessarily.
Whether you get paid depends largely on whether there is liability insurance coverage available to pay the judgment or whether the defendant has the assets available to pay the judgment. As you will find, the lack of insurance will also typically indicate a lack of assets.
A monetary judgment is simply an award ordered by a court that officially states the amount of money owed to you by a specified person or entity (the judgment debtor). This final judgment does not actually provide for the collection of the money owed to you.
Instead it authorizes you to use the legal means necessary to enforce the judgment so that you may be able to collect the money owed to you. In fact, the judgment may simply be the start of a long and difficult (sometimes impossible) process.
In the ideal situation, the defendant in your lawsuit is covered by insurance for the specific conduct that caused you harm. In case of coverage, your damages will be recoverable against the insurer up to the policy limits of the available insurance coverage. In some cases, there may be recovery for more than the policy limits but that is a topic unto itself.
But what happens when there is no insurance coverage to pay the judgment?
When there is no insurance coverage the law allows you to attempt to enforce the judgment. Unfortunately, as suggested above, this is often not an easy or inexpensive process. If the debtor is located and it is determined that he or she has assets with which to pay the judgment, the law provides a number of remedies for collection.
New Mexico law allows for wage garnishments. It also allows for the filing of liens against the property of the debtor in order to collect the money owed under the judgment. It is also possible to obtain what is called a writ of execution that will allow you to have the assets of the debtor seized to pay the judgment. Assets of the debtor include such things as income, bank accounts, automobiles other personal property and real estate of the debtor. However, it should be kept in mind that there is a homestead exemption that may place the asset of greatest value out of reach of collection.
Frequently, as suggested above, when there is no insurance coverage, it is generally the case that the judgment debtor simply does not have the assets to pay the judgment. Such a debtor is referred to as a judgment proof debtor. When the debtor is judgment proof, you may never collect the money owed to you by the judgment. And this begs the question of why go through the exercise to begin with.
Lack of insurance coverage often means a judgment proof debtor.
Most experienced lawyers have come to learn that when a defendant/debtor has no insurance coverage, the defendant is also likely to have no assets making the defendant judgment proof. This should be logically intuitive since people that have money and other assets will generally seek to protect those assets through insurance coverage.
When there are no assets to protect, there are often no assets to protect. Likewise, there may simply be no money or desire to pay insurance premiums. There are exceptions of course. Though these will merit investigation, they are fairly rare.
In the case of a lack of insurance, most law firms will be reluctant to take on a case even though there are substantial injuries and clear liability. A lawsuit can be a time consuming, costly and therefore risky venture for the attorneys . As such, careful consideration must be given to the likelihood of ultimately being able to collect on a judgment. This may seem harsh and insensitive but it is dictated by economic reality.
It is important to determine early whether or not insurance coverage is available. If there is not, chances are that except in fairly rare circumstances a lawsuit cannot be justified. These are questions that you should expect at the first contact with an experienced personal injury attorney.
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