If you cause an automobile accident, or if a person is injured on your property, your auto or homeowner's insurance typically pays for the injured person's medical and rehabilitative expenses. However, if you do not have insurance, or your insurance company denies the claim, you are legally liable for payment. If you do not pay out of pocket for a person's injury-related expenses, the injured person may sue you for recovery of these expenses.
Judgment
The injured person must typically file suit in the county where you reside. You will receive notice of the civil suit, which details your responsibility to respond. If you do not respond or cannot raise a convincing defense within the time allowed by your state, the court may issue a default judgment. This simply affirms that you are responsible for the expenses, and gives the injured party the right to take action to collect amounts listed in the judgment, including the injury-related costs, attorney fees and court costs.
Real Estate Lien
In most states, a money judgment creates a real estate lien, which gives the person awarded the judgment an interest in your home or other real estate property. This means that you cannot sell or otherwise transfer possession of your real estate until you pay the debt owed. If you have sufficient equity in your home to satisfy the judgment, the judgment holder may force the sale of your home. The court then awards the proceeds from the sale to satisfy the debt, and gives you any proceeds left over. However, forcing a home sale is expensive for the judgment holder, so an injured party will typically use other methods of recovery, if possible.
Bank Garnishment
An injured party with a valid judgment may garnish funds from your bank accounts to satisfy the judgment. In most states, the judgment holder must file for authorization from the court to demand garnishment of your bank account. The bank must freeze the account and send any non-exempt funds to the court to pay the judgment holder. Federal law exempts bank funds derived from Social Security benefits, disability, veteran's benefits and child support. Your state may also allow an exemption for a certain amount in your bank account---for example, New York exempts the first $1,740 in your account.
Wage Garnishment
A valid judgment allows the injured party to petition the court for garnishment of your wages, although states such as Texas disallow wage garnishment in most cases. With permission from the court, the judgment holder may require your employer to send a portion of your earnings to the court for payment of your judgment until it is satisfied. However, states typically limit the amount a judgment holder may garnish. For example, Ohio law allows a judgment holder to take 25 percent of your earnings after taxes.
Sale of Personal Property
Some states permit a judgment holder to petition the court to liquidate personal property to satisfy a judgment. An injured party with a valid judgment may order the sale of your car, jewelry, electronics and other valuables, subject to state exemptions. For example, Ohio law provides a $3,225 exemption for a vehicle, and a $1,075 exemption for personal property.
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