Being Sued for a Car Accident: What Are You at Risk of Losing?

Being Sued for a Car Accident: What Are You at Risk of Losing?


Being sued for a car accident: what can they take? If you lose the lawsuit, the court can seize your assets to pay for damages. Here’s a quick breakdown of what you might lose:

  • Wages: Your wages could be garnished.
  • Property: Liens can be placed on your property.
  • Vehicles: You might have to sell your car.
  • Savings: Your bank accounts could be targeted.
  • Bankruptcy: This might be an option if debts become overwhelming.

A car accident lawsuit can significantly impact your financial life. Besides dealing with injuries and repairs, you can be held financially responsible if found at fault. This can mean losing wages, property, vehicles, and savings. Some might even face declaring bankruptcy to cope with the awarded damages.

I’m Ethan Pease, an expert in workers’ compensation and financial risk associated with car accident lawsuits. With experience assisting clients through complex legal situations, I understand how vital it is to protect your assets and navigate these challenges effectively.

Infographic showing what assets can be seized in a car accident lawsuit: wages, property, vehicles, savings, bankruptcy - being sued for car accident what can they take infographic pillar-5-steps

Understanding the Legal Process When Being Sued for a Car Accident

Being sued for a car accident can be overwhelming. Let’s break down the key legal concepts you need to know: Statute of Limitations, Comparative Negligence, and Subrogation.

Statute of Limitations

A statute of limitations is a law that sets a deadline for filing a lawsuit. If you miss this deadline, you lose the right to sue.

In South Carolina, for example, you have three years from the date of the accident to file a lawsuit for injury or property damage. If the accident resulted in death, the clock starts on the day of the victim’s death.

Important: Failing to file within the statute of limitations means the court will almost certainly dismiss your case.

Comparative Negligence

Comparative negligence determines how much each party is at fault in an accident. Your compensation gets reduced by your percentage of fault.

For example, if you’re awarded $100,000 but found to be 30% at fault, you’ll receive $70,000. California follows a pure comparative negligence model, so you can recover damages even if you’re 99% at fault.


Subrogation is when your insurance company seeks reimbursement from the at-fault party’s insurer after paying your claim.

For instance, if your insurer pays for your car repairs, they might pursue the other driver’s insurance to recover that money. This process can impact the overall compensation you receive.

Understanding these concepts can help you navigate the legal maze of being sued for a car accident. Next, let’s explore what assets can be seized in a car accident lawsuit.

What Assets Can Be Seized in a Car Accident Lawsuit?

When you’re sued for a car accident, the stakes can be high. If the plaintiff wins, they can legally seize various assets to cover the awarded damages. Here’s what you need to know about what can be taken:


If you don’t have enough assets to satisfy a judgment, your wages can be garnished. This means a portion of your paycheck will be automatically deducted and given to the plaintiff until the debt is paid off. For example, if you owe $50,000 and your wages are garnished at 25%, you’d lose a quarter of every paycheck until the debt is cleared.


Real Estate: Your home can be at risk, but state laws offer some protection. Many states have homestead exemptions that prevent creditors from forcing the sale of your primary residence up to a certain equity limit. States like Florida and Texas have strong homestead protections, while others offer limited or no protection.

Vehicles: Your car, boat, or any other vehicle you own can also be seized. If the equity in your vehicle exceeds the exemption limit in your state, it could be sold to satisfy the judgment.


Bank accounts are fair game in a lawsuit. If you have significant savings, these can be frozen and seized to pay off the judgment. This includes checking and savings accounts, as well as money market accounts.

Personal Property

Jewelry, Electronics, and Other Valuables: Personal property like jewelry, electronics, and other high-value items can be seized. If you have valuable collections or luxury items, these could be sold off to meet the debt requirements.

Future Earnings and Assets

If you don’t have enough current assets, future earnings can be targeted. This includes:

  • Commissions
  • Royalties
  • Tax Refunds
  • Insurance Payouts
  • Stock Dividends
  • Stock Options
  • Trust Income


In extreme cases, you might consider declaring bankruptcy. This can protect certain assets, but it’s a complex process with long-term consequences. Always consult a legal expert before taking this step.

Understanding what assets are at risk can help you prepare and make informed decisions if you’re being sued for a car accident. Next, we’ll discuss how insurance affects asset seizure.

How to Protect Your Assets if You Are Being Sued for a Car Accident

Being sued for a car accident can be terrifying, especially when you think about what you could lose. But there are ways to protect your assets. Here’s how:

Asset Protection

1. Asset Protection Trusts: These are legal tools that can shield your assets from creditors. Setting up an asset protection trust involves transferring ownership of your assets to the trust. However, this must be done well before any lawsuit is filed, as transferring assets after a lawsuit can be considered fraudulent.

2. Homestead Exemptions: Many states offer homestead exemptions, which protect the equity in your primary residence from creditors. For example, states like Florida and Texas have strong homestead protections. Check your state’s laws to see what protections apply to you.

3. Retirement Accounts: Federal laws protect certain retirement accounts, like 401(k)s and IRAs, from creditors. However, the level of protection can vary by state, especially for IRAs. Knowing these laws can help you safeguard your retirement savings.

Insurance Coverage

1. Auto Insurance: Ensure you have adequate liability coverage. Alabama law requires drivers to have auto insurance, but having just the minimum coverage might not be enough. Consider increasing your policy limits to cover potential damages.

2. Umbrella Insurance: This type of insurance provides additional liability coverage beyond the limits of your auto and homeowners policies. It can be a lifesaver if the damages exceed your primary insurance limits.

3. Homeowners Insurance: If you’re sued for something that happened on your property, homeowners insurance can cover legal fees and damages. Make sure your policy includes liability coverage.

Legal Strategies

1. Hire an Experienced Attorney: An experienced attorney can help you navigate the lawsuit. They can investigate the accident, gather evidence, and develop a defense strategy. In Alabama, contributory negligence laws mean that if the plaintiff is even slightly at fault, they might not be able to recover damages. Your attorney will know how to leverage this.

2. Negotiate a Payment Plan: If you lose the lawsuit, negotiating a payment plan with the plaintiff can prevent the immediate seizure of your assets. This can give you time to manage your finances and avoid drastic measures like selling your home.

3. Avoid Fraudulent Transfers: Transferring assets to avoid paying a debt can be considered fraudulent and can lead to severe penalties. Always consult with an attorney before making any significant financial moves during a lawsuit.

4. Bankruptcy: As a last resort, filing for bankruptcy can protect certain assets from creditors. However, this is a complex process with long-term financial consequences. Consult a legal expert to understand the implications fully.

By understanding these strategies, you can better protect your assets if you’re being sued for a car accident. Next, we’ll discuss how insurance affects asset seizure.

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Being Sued for a Car Accident: What Can They Take?

How Insurance Affects Asset Seizure

When you’re being sued for a car accident, your insurance plays a crucial role in determining what assets might be at risk. Here are key factors to understand:

Policy Limits: Your auto insurance policy has limits on how much it will pay for damages. If the damages from the accident exceed these limits, you could be personally responsible for the difference.

Subrogation Claims: If your insurance company pays out a claim and believes another party is at fault, they might pursue a subrogation claim to recover the money. This can affect the overall compensation process and your financial liability.

Insurance Defense: Your insurance company will typically provide a legal defense if you’re sued. This can help reduce your personal financial exposure. However, if the damages exceed your policy limits, you’ll need to cover the excess out of pocket.

Role of Fault in Asset Seizure

The determination of fault plays a significant role in what assets can be seized if you lose a lawsuit:

Comparative Negligence: In some states, if you are found to be partially at fault for the accident, your financial liability may be reduced proportionally. For example, if you’re 30% at fault, you might only be responsible for 70% of the damages.

Contributory Negligence: In states like Alabama, if you are found to be even 1% at fault, you may be barred from recovering any damages. This can significantly impact the outcome of a lawsuit and the risk to your assets.

Fault Determination: The court will determine fault based on evidence such as police reports, witness statements, and expert testimony. If you are found at fault, the court can authorize actions to satisfy the judgment, such as:

Garnishment: The court can order a portion of your wages to be taken directly from your paycheck until the debt is paid off.

Liens: A lien can be placed on your property, such as your home or car, which must be paid off before you can sell or refinance the property.

Asset Sale: The court can force the sale of valuable assets, including real estate, vehicles, and personal property, to satisfy the judgment.

Bankruptcy: If you are unable to pay the judgment, filing for bankruptcy may protect some of your assets. However, this is a complex process with long-term consequences and should be considered carefully with the help of a legal expert.

Understanding these factors can help you navigate the challenging process of being sued for a car accident. Next, we’ll answer some frequently asked questions about what happens if your insurance doesn’t cover all damages.

Frequently Asked Questions about Being Sued for a Car Accident

What happens if my insurance doesn’t cover all damages?

If your insurance doesn’t cover all the damages, you might be personally responsible for the remaining amount. For example, if you have $50,000 in liability coverage but the court awards $100,000 to the plaintiff, you are on the hook for the extra $50,000.

The court can take various actions to collect this amount:

  • Garnishing your wages: A portion of your paycheck can be taken until the debt is paid.
  • Placing liens on your property: This means you can’t sell your property without paying off the debt.
  • Seizing your assets: This could include your car, savings, or other valuable items.

Can filing for bankruptcy protect my assets from a lawsuit?

Filing for bankruptcy can protect some of your assets, but it’s not a simple fix. Bankruptcy can stop wage garnishments and asset seizures, but it has serious long-term consequences. For instance, it will significantly impact your credit score and make it harder to get loans or credit in the future.

There are different types of bankruptcy:

  • Chapter 7: This involves liquidating your non-exempt assets to pay off as much debt as possible. It can wipe out many types of debt, including judgments from car accident lawsuits.
  • Chapter 13: This allows you to keep your assets but requires you to follow a court-approved repayment plan.

Consult with a bankruptcy attorney to understand the best option for your situation.

How can I negotiate a payment plan for damages owed?

Negotiating a payment plan can be a practical way to manage the financial burden of a lawsuit. Here’s how you can do it:

  1. Contact the plaintiff’s attorney: Express your willingness to pay but explain your financial situation.
  2. Propose a payment plan: Offer a reasonable monthly amount you can afford. Make sure to get any agreement in writing.
  3. Seek legal advice: An attorney can help you negotiate terms that are fair and manageable.

By taking these steps, you can avoid the more severe consequences of wage garnishment or asset seizure.

Understanding these frequently asked questions can help you better navigate the complexities of being sued for a car accident. Next, we’ll conclude with some final thoughts on how to move forward.


Being sued for a car accident can be a stressful and overwhelming experience. The risk of losing your assets, from wages to property, is real and can have long-lasting financial impacts. However, you don’t have to face this alone.

At Visionary Law Group, we specialize in providing expert legal representation to help you navigate the complexities of car accident lawsuits. Our experienced attorneys can guide you through the legal process, protect your assets, and work towards achieving financial recovery.

Financial Recovery and Legal Representation

Understanding the legal landscape is crucial in protecting your financial future. Our team is dedicated to ensuring you receive the best possible outcome, whether it involves negotiating a payment plan, disputing fault, or exploring asset protection strategies.

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Don’t wait until it’s too late. If you’re facing a lawsuit for a car accident, contact us today for a free case evaluation. Our team will assess your situation, provide straightforward advice, and guide you through every step of the process. Empower yourself with the support and expertise you deserve. Your journey to recovery and financial security starts now.

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