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  • Writer's pictureBrad Keating

Being Sued for Car Accident but Have No Assets - Is It Possible?

Updated: Jan 18

Many drivers play a form of Russian Roulette because they drive without adequate insurance. While no one expects to get into an auto accident, it is a possibility. Without proper car insurance or high enough policy limits, one might wonder if they can get sued by the injured person.

In an at-fault state, if the other driver hits the victim, they can be sued by the victim's insurance company or the plaintiff's attorney. Car accident lawsuits happen all the time, and many of them involve someone who had no car insurance to cover a car wreck.

What Happens if the Lawsuit Is Lost and the At-fault Driver Can't Pay

What Happens if the Lawsuit Is Lost and the At-fault Driver Can't Pay

State laws require each driver to have appropriate insurance coverage, including personal liability insurance. Generally, the at-fault party causes the car accident, and their insurance policy covers the damages. This also includes payment for personal property damage, medical treatment, and the victim's attorneys' fees.

The injured party can file a personal injury claim with a lawyer's help or might go through their insurance adjuster. Regardless, the at-fault driver might have insurance policy limits that are much too low. Often, insurance companies don't disclose information about how much personal injury cases might cost out of pocket.

Overall, the insurance company is required to pay damages to the other party after an accident. However, it doesn't want to spend that much on a hefty judgment, so it might recommend the lowest amount of coverage.

When that happens, the at-fault party is likely to owe money to the victim.

Judgment Proof

Most people do not sue someone if they know they've got no valuable assets or insurance. It's just not wise because they are likely to win and have trouble recovering the money. After all, it's expensive and time-consuming to go through a lawsuit.

The most common situation is that someone brings a lawsuit against another person, but it exceeds the money they've got to pay it. If the at-fault person doesn't have the resources to cover the judgment or claim made against them, they're called "judgment proof."

That sounds great in theory, but it doesn't mean the person is invincible.

Most of the time, a judgment that can't be paid turns into another type of debt. Therefore, it typically gets turned over to the collection agency, which does what it can to get reimbursed for the debt.

However, debt from a lawsuit is often erased through bankruptcy. In this situation, that debt type isn't like tax debts or a student loan that's hard to get rid of. Therefore, the at-fault person might be able to remove that debt from their name because of auto accidents.

It's in everyone's best interest to talk to an attorney about whether a lawsuit should be filed, what steps can be taken if the at-fault person can't pay, and all the rest. However, if the judgment is lost and the attorney cannot be paid, they could also become a creditor to add to the list. While they often provide free consultations, the lawyer wants to get paid just as much as the victim of the accident.

Settlement Recovery Approaches

If the lawsuit has just been lost, the other party is likely to pursue the at-fault person for judgment recovery if they:

  • Are employed

  • Own real estate

  • Own any assets or bank accounts


If they are employed but can't pay the full judgment against the victim, the collection agency or opposing attorney is likely to try taking some of the income/wages earned. This is called wage garnishment.

However, those who get disability or social security income or earn the minimum wage are off-limits to creditors. Still, if the income doesn't fall into those three categories, a judge might take 25 percent of those earnings to recover what the victim is owed.

Real Estate

Each state had various rules about what's protected from creditors when focusing on personal property. In many cases, homestead laws are there to protect property and the home. Vehicles are also safeguarded, especially if they're used for commercial needs.

However, it all depends on how severe the injuries were. Also, each person is required to have insurance coverage on their vehicle. If there was none, it's considered up to the at-fault person to use their own money to pay for the accident, regardless of their financial situation.

Assets and Bank Accounts

Most of the time, the attorneys working for the victim turn to the car insurance company first to pay any debts. However, if the at-fault person had no insurance, they can go after the bank accounts and other assets. Though retirement accounts are protected, such as 401(K)s, savings, investment accounts, and checking accounts could be liquidated to pay the debt.

With that, future money isn't excluded from the situation. If the at-fault person is currently unable to pay their debts, that might change in the future. The victim's lawyer can check up on that to go after whatever money there is. For example, if the guilty party was a student who's about to graduate and start working, assets could be taken from future earnings.

Declaring Bankruptcy

Bankruptcy frightens many people, but it's not necessarily a bad thing. If someone declares bankruptcy Chapter 7, creditors cannot collect from them, and that often includes attorneys and victims of car accidents. Though it makes little sense to use bankruptcy for a singular debt, it's important to look at the total financial picture. Bankruptcy might offer a big scope of relief, especially if the guilty party is required to pay tens of thousands of dollars out of pocket because insurance companies aren't involved.

The Basics for Uninsured Drivers

Roughly one in eight drivers don't have auto insurance. However, they can still cause a car accident.

It really depends on whether the parties live in a fault or no-fault state. Therefore, if the victim was 51 percent or more at fault for the situation, they cannot recover damages. If they're 49 percent at fault, they can recover some, but it might be a lower amount.

What Is Liability Insurance?

Most people only use a liability insurance company or only have liability coverage. It pays for injuries and property damage to another person caused by the accident where the policyholder was at fault. Generally, most states require such coverage to legally drive a vehicle.

The guilty party's own insurance company then pays out any damages for lost wages, medical bills (such as giving the average settlement for soft tissue injury caused by the car accident), and the like. Whether the victim was rear-ended, was hit head-on, or got T-boned, the insurance covers the damages for the lawsuit.

However, most people only have the minimum liability insurance limits. They are also required to have uninsured motorist coverage of $50,000 per accident or $25,000 per person. This is true in many states.

That covers their medical expenses and other issues if the guilty party doesn't have insurance or is underinsured. However, the insurance company of the victim might try to sue the guilty party to recover some of the funds it paid out. Therefore, an uninsured or underinsured motorist might be sued regardless of their ability to pay.

At-fault States

Most states follow the at-fault system to some degree. This allows drivers to sue for damages. If a person is found at fault for the car accident, the other driver may file a personal injury lawsuit and get financial recovery for lost wages, medical bills, property damage, pain and suffering, loss of consortium, and the like.

If the guilty party had no policy with an insurance company or the policy limits were too low to cover everything, they are expected to pay the damages through wage garnishments or out of pocket.

Therefore, if the guilty party has no insurance, they are held personally responsible for the judgment entered against them and must pay it themselves. The judge doesn't care if there's money to cover it; they were liable for the accident and must make restitution. They may choose to hire a lawyer to help them try and lower the amount and reduce costs. However, the guilty person must pay whatever the settlement agreement or judgment is.

No-fault Car Insurance States

There are 12 states (and Puerto Rico) that use the no-fault system. That means both drivers should seek damages from their insurance company policies, regardless of who caused the accident.

The injured driver may still sue, but they must go outside of the current insurance system to file a personal injury claim against the guilty party. This only happens in special cases when injuries are serious or significant, resulting in medical expenses of $20,000 or more.

However, the same applies. If someone with severe injuries sues the at-fault party and they don't have insurance, they should expect to pay the damages themselves from their personal bank account.

Pay-to-play Regulations

Many states have tried to keep people off the road if they don't have a policy through an insurance company. There are now regulations and laws in place to prevent drivers from driving. This can include fines for driving without insurance, jail time, and suspended licenses.

However, some states use the "pay to play" policy. An injured driver can't recover pain and suffering damages if they're not covered by insurance. That applies, even if the driver wasn't considered at fault for the car accident.

It should still be noted that pay-to-play policies allow the driver to recover tangible damages, such as to property or for medical expenses. However, that doesn't really solve the uninsured driving problem.

How to Avoid a Problem

How to Avoid a Problem

There are a few ways that people can avoid having to pay settlements without the help of an insurance company. For example, every driver on the road should have the minimum amount of liability coverage. They should be aware that sometimes, that's not enough to cover all the damages. Therefore, their assets could be taken away if the claim is significant or there were serious injuries involved.

The victim of the accident has the right to receive compensation for their injuries, whether the other party has the money to pay or not.

Therefore, the short answer is each driver on the road may want to consider getting full coverage or comprehensive coverage for their vehicle. That way, they work with an insurance adjuster, and the policy covers the expense.

Another way to avoid issues is to be a careful driver. Though that can't prevent every single accident, it does go a long way toward reducing the risk of hurting someone or damaging their vehicle. Take a safety course, even if it's been done before. That way, they know the rules of the road and can hopefully avoid a lawsuit.

Taking these two things to heart ensures that the likelihood of an accident is lower. The person is being careful and has appropriate coverage if something goes wrong.

Call a Personal Injury Lawyer at the Keating Law Firm

It's never a good idea to admit fault to a police officer or the victim of the car accident. It's best to stick to the facts when filling out a police report or speaking to the insurance company adjuster.

Being at fault for a collision is never a good thing, but some things can be done. Contact the Keating Law Firm in a timely manner to assist with the case. Receive a free consultation about fighting the victim's personal injury lawsuit. Once the contract is signed, the attorney-client relationship can grow. You can also seek legal help if you are being sued for a car accident 2 years ago.

There is help for those who can't afford to cover a lawsuit and have no insurance or assets. Speak with a vehicle accident lawyer to find out what options are available. Overall, there might be a way to protect what little money there is and work out a payment system.

Though the at-fault driver is responsible for covering any damages, methods exist to lower the costs and protect the person's wages as much as possible.


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