What Happens When You Sue Someone With No Money [+ Tips] (2024)

What would be the result when you file a lawsuit against someone who doesn’t have any money? Would you have an outcome you expected?

According to experts, here’s what could happen:

Patrick Gill

Personal Injury Attorney, Staver Accident Injury Lawyers

You can get a court order requiring someone with no money to pay but it can be very difficult to collect

There are many reasons to sue another person. You may want to modify that person’s behavior and get a form of a restraining order. You may want to stop someone from doing something (or make someone do something) in the form of an injunction. You may want to force the performance of a contract.

None of these necessarily require the other person to have money in order to comply with an eventual judgment. But probably the most common reason someone sues another is to collect money damages.

As the old saying goes, ‘you can’t squeeze blood from a turnip.’ You likely don’t have to read this article to already know that you can’t get something from someone that they don’t have.

So when you sue someone with no money – in order to collect money – you have to get creative and look beyond that individual’s personal savings.

Insurance is typically the first place to look when trying to collect from someone with no money

Depending on what you are suing for, there are some potential sources of recovery. Insurance is typically the first place to look when trying to collect from someone with no money. If you are involved in an automobile accident, that person might be covered by automobile insurance, even if they have very little money in the bank.

If you are involved in an incident at someone’s home, that person might have homeowner’s insurance. However, insurance usually won’t provide coverage for intentional acts. If someone steals from you or purposely breaks something of yours, they probably won’t be covered by insurance.

It’s viable to collect money from the employer or whoever was directing that person’s behavior

It’s also wise to determine if the other person was on the job or was acting at another person’s direction when they injured you or caused your economic loss. It’s often viable to collect money from the employer or whoever was directing that person’s behavior. This can also potentially apply to a minor through his or her parents.

If it turns out the other person has no insurance and is not covered by anyone else at the time, then you might be stuck going after the person with no money.

When you sue someone with no ability to pay a judgment, that person is considered ‘judgment-proof,’ or insolvent. Judgment-proof is not a literal term. You can absolutely get a judgment and a court order requiring someone with no money to pay you money – but it can be very difficult to collect.

A court might order someone to sell assets to pay a judgment if they have no money

One avenue to recovery is to look at a person’s assets. A court might order someone to sell assets to pay a judgment if they have no money. A court might also order the garnishing of someone’s wages until the judgment is paid.

These options can be tricky, time-consuming, and hard to enforce.

Ultimately, this is probably the last case scenario. In the Civil Justice System, we deal mainly in money damages. For those who are being sued: ‘more money, more problems,’ might just be true.

Mark Chatow, Esq.

Business Litigator, Chatow Law

No money can mean an easier case

If a person being sued truly has no money, they will frequently just not answer the Complaint, and will allow the Plaintiff to take what’s known as a default judgment for the full amount the Plaintiff is claiming.

A default judgment does not require a trial, and once issued, the Plaintiff (or “judgment creditor”) can then attempt to collect on that judgment from the Defendant (or “judgment debtor”).

No money now does not mean no money ever

Even if a judgment debtor does not have the money to pay a judgment in full now, they may have a job, own a house or other property, or own an interest in a company. If so, a patient judgment creditor can eventually collect some or all of their judgment.

For example, the judgment creditor can garnish the judgment debtor’s wages and require the employer to pay a portion of the money to the judgment creditor directly every paycheck.

A judgment creditor can file a document known as an abstract of judgment with the County where the debtor owns property. If that property is ever sold, the judgment may be paid from a portion of the proceeds of the sale.

Interest accrues indefinitely on unpaid judgments

When a person does not pay a judgment in full, the balance typically accrues interest. For example, in California, interest on a judgment accrues at 10% per year.

I had one case where we were awarded a judgment, filed an abstract, and then five years later received a call from an escrow company that the debtor was selling their home. My client was paid the full amount of judgment plus more than 50% of the original judgment amount in accrued interest.

Clayton Hasbrook

Attorney, Oklahoma Lawyer

See Also

11+ Ways to Pay for a Funeral if You Can't Afford One | Cake BlogHow To Create Passive Income With No MoneyWhat Happens When Someone Sues You And You Have No Money?What To Do When You Have No Money (Survive & Thrive)

You have the option of waiting to sue once they are able to pay

Contrary to popular belief, it is entirely possible to sue someone who has no money to pay you. The court’s decision isn’t contingent on the size of your debtor’s pocket – if they are guilty, they are legally obligated to pay you.

If your debtor has no cash, you have the option of waiting to sue once they are able to pay. Check your state’s statute of limitations to see how long you can wait to sue someone.

Appear in court. In small claims court, you cannot appoint a lawyer to represent you, so be prepared to represent yourself on the day of the hearing.

David Perecman

Founder and Lead Trial Attorney, The Perecman Firm, P.L.L.C.

Individuals may be difficult to collect from unless they have significant assets

When you need to file a lawsuit against an individual or company because of the harm they have caused you, the usual source to pay a lawsuit award or settlement is liability insurance.

Each state sets minimum coverage limits for bodily injury liability and property damage liability that drivers must purchase. Most states require drivers to carry at least $25,000 in auto liability insurance. However, people and businesses generally are not required to have liability insurance.

So the question becomes, what do I do then? The alternatives are limited.

Firstly, many attorneys will likely not take a case against an uninsured individual or company. Pursuing legal actions against another party takes a lot of time and money. Attorneys want to know that there is a solid basis for the lawsuit and a source such as insurance to collect damages from the defendant.

If the party does not have insurance, the lawsuit can still be filed against them. However, the problem then becomes collecting the damages.

Sometimes uninsured parties will ignore the lawsuit filed against them. In that case, with the help of your attorney, you can secure default judgment. However, this will take time and effort that, as I said, many attorneys may not want to get involved with.

In some cases, you may want to hire a company that can do a search to see what assets the party you wish to sue has. Still, the party simply having assets and being able to collect them as damages are different. Large companies with significant bank accounts are the easiest to get a hold of, but the effort is still required.

Smaller companies don’t always have enough liquid assets to collect from. Individuals may also be difficult to collect from unless they have significant assets, particularly money in the bank.

So, while it is possible to collect from smaller companies or individuals, it is difficult and, unfortunately, may not be worth the time and effort in the end. Firsthand, my firm has been able to collect from uninsured individuals in the past, so it can be done.

David Aylor

Founder & CEO, David Aylor Law Offices

You may be able to take possession of their assets or collect their future income or assets

If you sue someone with no money and successfully win your case, you’ve only won the rights to the money and may run into trouble getting the losing party to pay their debts.

There are a few options you can consider pursuing through the legal system to collect what’s owed to you:

• The judge may approve to garnish the debtor’s wages, though if they live on social security, you won’t be entitled to any of the cash. With wage garnishments, it will take some time to recoup the entire debt owed from them.
• You may also be able to take possession of their assets or collect their future income or assets.
• If the debtor owns a business but has “no money,” you may also be able to collect the business income or assets if they have no personal assets to offer as payment.

Michael Malk

Employee Rights Attorney, Malk Law Firm

See Also

31 Things To Do When You Have No Money - LifeHack

If and when the individual’s financial situation turns around, you can file a collections action

We sometimes have cases where we are suing an individual business owner with no money and assets. There are various options, including:

• Insurance: homeowners insurance policies, umbrella policies, and some business policies can be helpful in finding insurance coverage for a claim;
• Entering judgment: If you get a judgment against an individual with no money, you can keep the judgment current and renew it add accrued interest. If and when the individual’s financial situation turns around, you can file a collections action to collect on your judgment;
• Alternate Theories of Liability: In some cases, there may be other theories of liability to allow you to sue another person for the liability of the individual with no money.

Minesh J. Patel

Founder, The Patel Firm

You can ask the judge for an “execution”

If you sue someone who has no money and successfully wins the case, you have a few different options to pursue your full or partial payout. Since plaintiffs don’t have the power to go after their money directly, both options require more visits to the court, where judges will decide the next best steps.

You can ask the judge for an “execution,” which gives you the right to seize some of their assets, like their home or car. If they claim to have no cash and won’t pay you out, much like a business, they’ll need to liquidate or surrender their assets.

The debtor may also agree in court to a repayment plan

You may also pursue a supplemental process, in which the defendant’s wages are garnished by the courts – these garnishments are given to you toward the debt owed. The debtor may also agree in court to a repayment plan if they want to avoid executions and wage garnishments.

The repayment plan is much like a loan – the debtor slowly pays down their debt with manageable monthly payments.

Greg Rozdeba

President, Dundas Life

You can sue someone even if they have no money. The lawsuit does not rely on whether you can pay but on whether you owe a certain debt amount to that plaintiff. Even with no money, the court can decide that the creditor has won the lawsuit, and the opposite party still owes that sum of money.

Here is what happens when you sue someone with no money:

Garnishing wages

If you sue someone with no money and win the case, you can legally collect a portion of the settlement from their monthly wages. The percent of wages that you can receive depends on which state you live in.

However, if the other party is living on Social Security, welfare, or unemployment, you cannot take a portion of their income.

Placing a levy on property

If the opposite party has assets such as vehicles, real estate, investment accounts, or bank accounts, you can place a levy on them. This means that if you record your judgment with the authorities, you can either get all or part of your settlement when the property is sold.

Repayment plan

The judge will ask the opposing party if they can pay the debt. The judge will also ask if a repayment plan works for them.

According to this plan, they will pay a portion of the debt every month. It is part of a court order called an “agreement for judgment.” If the opposing party is unable to pay the amount they agreed to, they could be in violation of the court order.

Anthony Babbitt, PhD, MS

Change Management Consultant | Executive Mentor, Babbitt Consulting

A person may have no money but might have other assets

Any attorney worth their salt will first do an asset search to identify what assets a person has available for forfeiture in the possible event the client wins the suit. Attorneys that fail to do this, and there are many, are usually more interested in the clients’ assets and ability to pay.

I have witnessed many people prevail in court only to discover that the judgment they won is nothing more than a piece of paper costing tens or hundreds of thousands of dollars. When someone has no assets to lose, they are essentially “judgment proof.”

A great example of this is the Senator Teddy Kennedy accident that cost a young woman her life when a car he was driving plunged off the Dike Bridge. Despite the vast Kennedy fortune, the girl’s parents only received about $150,000 from the insurer of the vehicle. By holding his assets in trust and other entities, Ted Kennedy had made himself judgment proof.

Conversely, when OJ Simpson lost his civil suit, he attempted to hide his assets by “giving” them to friends and relatives, in what the courts determined was “fraudulent conveyance.”

Deciding whether to sue should begin with what one hopes to gain.

In a famous example, Taylor Swift sued someone for sexual assault, asking only $1. The suit was making the point that she had, in fact, been sexually assaulted by the person. She was more interested in clearing her name and bringing publicity to the assaulter’s bad acts than she was in reaping a financial windfall (which may not have been possible).

There are many examples of people who have won lawsuits from people with no assets, money or otherwise, to seize. This is an important distinction. A person may have no money but might have other assets. If they have other assets, a judgment must be granted in addition to the successful lawsuit.

For instance, Person A may win a suit against Person B, in which the court determines an award of $100,000 is appropriate to return Person A to the condition they existed before the bad acts of Person B. However, Person B does not have $100,000. Person B does have a 50% interest in a home worth $200,000, though.

Person A must show that they have a judgment for $100,000 from their successful lawsuit. If so, they can use this judgment to obtain a lien against Person B’s interest in the home. Once the lien is attached to the property, Person A can start legal proceedings forcing the sale of the home so they can recoup their judgment. The same can be applied to other assets.

There are also times when Person B may not have $100,000 TODAY but might in the future. Perhaps Person B is in medical school or stands to inherit money from an elderly relative. In that case, Person A would want to keep the judgment alive until the assets can be seized from Person B at a later time. Often, this must be done every 5-6 years.

Some states allow for interest to be collected, and some states allow for the costs to keep the judgment “alive” to be added to the total amount owed. If Person A fails to keep the judgment alive, they risk losing the opportunity to collect on their judgment.

Essentially, the court-awarded judgment is nothing more than a very expensive piece of paper.

If kept alive long enough, it is possible that old judgments can eventually be seized. This process obviously adds a great deal of time and expense to the entire process. A person’s ability to pay a judgment should factor into whether or not that person is sued in the first place.

Otherwise, winning in court is merely the beginning of a longer, and sometimes more expensive, process.

Christopher Morgan

Chief Executive Officer, Credit Help Info

Suing someone with no money is a complicated process, but it is entirely possible. First, you have to analyze if the people you are filing against have the financial power to pay off damages caused in an accident.

In most cases, you are benefiting from someone’s insurance provider rather than them personally. In case of no insurance or money, the party would be held personally liable for the damages.

Here are ways you can collect money from them:

Future income or assets

If the party is financially weak right now, it does not mean they will be worse off forever. Circ*mstances can change in the future, and in that case, you can extend the judgment period and wait to collect your money. Judgments continue to be collectible as long as you are unpaid.

Placing a levy on property

You can get your money back by placing a levy on the offender’s personal property such as their vehicle, real estate, or even their bank account. Ensure that you are in contact with the local recorder’s office so if the property is sold, the payment can be transferred to your account.

Business income or assets

If the party does not have the money upfront to pay off the damages, their business items may be sold to settle the judgment. A business that is bringing a specific amount of income may have to give part of its earnings to pay off any damages or money owed to you in response to the accident.