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A lawsuit can be terrifying, especially if you might be at fault for an accident and have no assets. So what happens if someone sues you after a car accident and, even more important, can it be prevented? If all else fails, what options are available to you if you lose the lawsuit?

These are important questions to ask in the aftermath of an accident where you might be at fault. Here's a look at what you need to know as you evaluate your rights, risks, and liabilities when a car accident becomes a lawsuit.

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What Happens If Someone Sues You After A Car Accident?

Because of the hassle of a lawsuit and because accident claims are typically handled by insurance companies, suing an at-fault individual after an accident is thankfully not that common. However, it does happen. If you've been served with a civil complaint as a defendant in a car accident case, it's important to remain calm and explore your options for how best to proceed.

Your first step should be to consult with an attorney who can explain the case to you and to help you determine the best strategy going forward. Know that most cases are settled before trial because the plaintiff is seeking the quickest payout possible and because both sides can benefit from an early resolution.

Can You Be Sued Personally?

The short answer is yes as the injured party (referred to as the "plaintiff") has the legal right to sue the at-fault driver for their damages. This is likely where the at-fault driver is an uninsured or underinsured motorist (UM/UIM). In this case, the plaintiff has two options to recover damages:

  1. Suing The UM/UIM Driver Personally: This attempt to collect damages is costly and time-consuming and may only render a "paper judgment" if the defendant has no assets. So even if the plaintiff wins, they may not be able to collect on their judgment.
  2. Filing An Uninsured Motorist Claim With Their Insurance Company: UM/UIM coverage is often required by law so insurance carriers can provide a payout for individuals who are struck by UM/UIM drivers. There are also umbrella policies that can satisfy claimed damages when the principal insurance can't, but it's possible that the payout coverage could turn out to be less than the preferred amount.

If you've maintained low insurance policy limits and the injury to the other party is greater than those limits, you could be deemed an underinsured motorist for purposes of a lawsuit.

Can You Reduce The Risk Of A Car Accident Lawsuit Against You?

If you're at risk of being sued, you need to carefully plan for asset protection after your accident so that you can safeguard your holdings as you negotiate during the insurance settlement process. If you expect personal legal liability after an accident, consider the following steps:

  1. Determine with your insurance carrier whether the injury sum will likely be greater than your policy coverage.
  2. Understand which assets are likely at risk and those which are protected from judgment.
  3. Define a plan to safeguard your more vulnerable assets.
  4. Work with an attorney to draft and submit a financial affidavit defining why it would be difficult to collect on these assets in a money judgment.

It's important to protect your assets in the right way. You should avoid making sudden asset transfers right after an accident as that could be deemed a "fraudulent conveyance." This is when you unlawfully place an asset beyond the grasp of a known creditor and it can trigger a lawsuit to nullify the transaction.

Can An Insurance Company Sue You?

Unless you live in one of the thirteen no-fault states, the direct answer is yes, another driver's insurance company can sue you for personal injury and property damages not covered by your insurance, but this recourse in not so clean cut. The issue no longer concerns itself so much with who is actually at fault, but rather the cost to litigate the case.

Your own insurance company can also attempt to sue you by alleging policy nullification. In this type of lawsuit, your insurance company would allege that you as a policyholder did something to void your coverage under the policy and therefore the insurance company is not liable for paying on a claim by another driver. Rest assured, however, that your own auto insurance company rarely sues its policy holders for damages because it's also simply not a good look.

What Happens If Someone Sues You After A Car Accident And You Lose?

If you're found to be at fault for the damages in a car accident lawsuit, you need to understand what's likely at stake.

What's The Difference Between A Settlement And Judgment?

A settlement is an agreement between the parties to resolve their dispute out of court while a judgment is an in-court decision about who wins the case. It's usually better to settle because of the additional expenses that an in-court judgment requires and because of the uncertainty of the outcome of a trial.

What Can They Take? Can They Put Me In Jail Or Take My House?

Once a judgment is rendered, a plaintiff's best tool is a writ of garnishment against the defendant's bank accounts and earnings. The bank will then freeze the defendant's assets accordingly.

For wages, the plaintiff is usually entitled to a fraction of the defendant's salary every month. However, the defendant might be entitled to garnishment exemption based on state law. For example, some states like Florida offer a homestead exemption, so that the defendant's primary residence will not be vulnerable to a forced sale for a car accident judgment. However, other states might not. Civil car accident cases do not typically result in criminal jail time, unless, for example, the case involved a hit and run.

What Happens If I Declare Bankruptcy?

A judgment that cannot be paid, becomes an unrecoverable debt like any other. This "lawsuit debt" is subject to bankruptcy laws, but the laws are far less strict when compared to those covering student loans or tax debt, so lawsuit debt could possibly be discharged in bankruptcy.

Another fortunate piece of good news is that creditors are more willing to reduce the amount due when it becomes clear that this amount is at risk of becoming another paper judgment.

Are You Prepared For What Happens If Someone Sues You After A Car Accident?

Whether you're fearing that someone might sue you after your car accident, or someone already has, know your rights and liabilities better, including your likelihood of success. Get the answers you need with a free case review today.

Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.