Car Accidents and Lawyers to Reduce Stress

Posted on: 29 June 2015

The purpose of filing a lawsuit is to make sure that you receive appropriate compensation for an injury or loss that you've sustained as the result of someone else's actions. That means that knowing how to collect and handle the money is just as important as being able to prove your case in court. Take a look at some things you need to know about collecting after your lawsuit concludes.

Make Sure You Can Collect Before You Sue

Ensuring that you can collect the money that you sue for starts before you file a lawsuit. In most cases, you'll be collecting money from the defendant's insurance company. The car insurance company pays out if you've been injured in a car accident, a homeowner's insurance company pays out if you've been injured on someone else's property, and a business insurer pays out if your injury occurred on commercial property.

However, in some cases, your injury may not be covered by the defendant's insurer, or the defendant may be uninsured. In those cases, you and your attorney will need to do some investigating. Does the defendant have assets or funds that you can go after in court? Do they have income that you can have garnished? You may still be able to sue if they don't, but you may not be able to collect any cash. People who have no insurance, assets, funds, or garnishable income are said to be judgement-proof. They can't pay, which means it may cost you more money than it's worth to sue them.

Know How To Collect

Start ensuring your ability to collect immediately by checking the paperwork to be sure that the defendant is properly named in the lawsuit. The court may not enforce your judgement until the defendant has a chance to appeal. In most cases, the defendant will have 30 days to appeal, but you should check to be sure that this is true for your case.

Once the time for appeals has passed, you should begin trying to collect by contacting the defendant in writing. Consider agreeing to a payment schedule that spreads payment out over time if the defendant can't afford to pay all at once. After that, if the defendant still fails to pay, you and your attorney can file a lien against the defendant's assets or ask the court to begin garnishing wages. Alternatively, you can sell the debt to a collection agency. You won't get the full amount that you're owed, but the collection agency will give you cash up front for the debt, and you'll won't have to be bothered with collection efforts.

Understand Your Tax Obligations

Any time you're in a position to receive a large chunk of money, you need to consider whether or not you owe any of it to the IRS. Failing to pay taxes you owe on money you receive can cost you more in the long run than just paying the tax from the beginning.

When it comes to lawsuits, any amount that you receive for a physical injury or illness, for medical costs, or for lost wages is tax free. You don't owe any tax on that. However, if you receive interest on lawsuit judgement payments, punitive damages, or compensation for a non-physical injury (like harassment or discrimination) that income is taxable. In some cases – for example, if you received compensation for an injury and punitive damages for negligence – this means that part of your award is taxable and part is not. It's best to consult with a tax expert and figure out what you owe the IRS before making any large purchases.

Always seek professional advice when it comes to handling money from a lawsuit. Your lawyer can help you decide if a case is worth your while, financially speaking, and can help you find ways to enforce a judgement in your favor and handle the money once you have it. To learn more about personal injuries, contact someone like Schlicter & Schonack LLP.