If you’ve lost a lawsuit, you’re probably wondering what assets can be seized by a judgment creditor. The answer to this question contains both good and bad news. Leading with the bad news, a judgment creditor can seize almost any type of property, from cash and jewelry to vehicles and real estate, to satisfy a judgment. However, the good news is that these seizures don’t take place automatically and often cause prolonged legal battles that give you a chance to keep your assets.
Here, we’ll help you better understand what personal property can be seized in a judgment and how to protect those assets:
- How Creditors Can Seize Assets
- Assets That Can Be Seized by a Judgment Creditor
- Future Property Seizure
- Understanding Your Rights as a Debtor
- Who Needs To Protect Their Assets?
- What Assets Can Be Seized by a Judgment Creditor FAQ
How Creditors Can Seize Assets
Sometimes, when a creditor wins a judgment against a debtor in court, the debtor will claim that they do not have the means to satisfy the debt outright. In this case, a creditor can attach a claim to the debtor’s assets. However, this will not automatically award those assets to the creditor, especially if the debtor has implemented any asset protection strategies.
It is up to the creditor—not the court—to collect on a judgment. The creditor must first find out what assets a debtor has that they can use to satisfy the obligation. To do this, a creditor must request a Motion for Examination of Judgment Debtor. Once this motion has been filed, the debtor is obligated to appear for examination, or they may be held in contempt of court.
At the judgment debtor examination, the debtor will be placed under oath. While under oath, they must answer the creditor’s questions truthfully or risk perjury charges, which can carry a heavy fine or even jail time.
However, while a debtor is required to truthfully answer any questions, they are not under a legal obligation to volunteer any information about his or her assets. A creditor must ask the right questions. After the procedure, the creditor must file another motion in court. Only then will they be able to attach a claim to the debtor’s assets or properties that are not exempted by the state.
Assets That Can Be Seized by a Judgment Creditor
There is no shortage of assets that can be seized by a judgment creditor. Everything from physical property to investments is on the table for seizure. Here are some examples of what personal property can be claimed in a judgment:
- Cash
- Investment accounts
- Stocks and bonds
- Expected gains
- Real estate
- Vehicles
- Physical assets (e.g., jewelry, collectibles, etc.)
Despite the far-reaching definition of property, each state offers a debtor certain exemptions that fall within specified value limits. If these assets are all that remain in the debtor’s possession, the exemptions can render the judgment virtually hollow. For example, some states protect the value of a debtor’s primary residence against seizure.
In addition to certain state-sanctioned assets that are exempt from judgments, debtors can protect their own assets through other means. Namely, if a debtor establishes a wealth defense strategy that includes an offshore asset protection trust, their creditor may be unable to access the wealth contained inside the trust. This is especially comforting to know when the judgment arises from a frivolous lawsuit or a predatory claim.
Future Property Seizure
While it may be difficult to imagine a creditor going after a property you do not yet own, it happens often. For instance, you may receive commissions as part of your compensation at work. The creditor can attach your future commissions to the judgment against you. A judgment can also seize royalties from a book, film, or other type of creative work. Your creditor can even lay claim to tax refunds, insurance payouts, and dividends from company shares.
Understanding Your Rights as a Debtor
Once you learn you have a lawsuit filed against you, it’s important to educate yourself about the laws in your state regarding your rights as a debtor. Take time to learn what personal property can be seized in a judgment in your home state. You’ll likely realize you stand to lose more than you first thought. In some cases, the state you live in may not even protect your home.
What you always have the right to do, though, is set up an asset protection strategy. By hiring a professional to set up strong wealth defense tools like offshore asset protection trusts, you can put your personal belongings out of a creditor’s reach. However, you should know that these tools are best deployed before your lawsuit starts. If you’re worried about being sued in the future, start setting up your asset protection plan today.
Who Needs To Protect Their Assets?
There are certain professions that carry a high risk of litigation, including careers in medicine, law, and financial planning. In the past, people who worked in these industries were some of the only individuals who had to worry about setting up an asset protection plan. However, today it seems like any profession can be considered high risk for abusive lawsuits. That’s why it’s a smart idea for anyone in a high-risk profession to set up an asset protection plan before a lawsuit upends their life.
The best time to initiate an asset protection plan is before someone files a lawsuit against you, of course. But even after you’ve been named as a defendant in a lawsuit, you can still protect your assets. At this point, your options are more limited, but those that remain available to you can still be effective.
Stop Your Assets From Being Seized by a Judgment Creditor With Help From Asset Protection Planners
Now that you know there are virtually no limits to what assets can be seized by a judgment creditor, you should have a better sense of what you stand to lose if you don’t have a wealth defense strategy in place.
If you’re concerned about being named in a lawsuit or have already been listed as a defendant, setting up an asset protection plan is the best way to keep your belongings safe from a judgment creditor. Here at Asset Protection Planners, we’ve spent decades helping thousands of people just like you establish effective wealth defense strategies that protect their assets from lawsuits, creditors, and other threats.
Don’t wait for a lawsuit to put everything you own at risk. Contact us today to start safeguarding your hard-earned wealth.
What Assets Can Be Seized by a Judgment Creditor FAQ
What steps can you take to stop assets from being seized by a judgment creditor?
When people look into what assets can be seized by a judgment creditor and realize virtually everything is up for grabs, many of them start to research how to stop the worst from happening. Luckily, asset protection plans, specifically those that utilize offshore asset protection trusts, can keep almost anything far away from creditors.
To effectively stop assets from being seized by a judgment creditor, you first need to contact an asset protection professional. These legal and financial experts have a keen understanding of the legal landscape and know exactly which trusts and corporate structures can effectively guard your wealth. More importantly, they know how to set up those very same structures to work as effectively as possible.
After you’ve enlisted the help of a professional, they’ll pass along a few helpful tips. One of the most important pieces of advice they’ll give you is that you should avoid owning things in your name whenever possible. This strategy makes it harder for creditors to find the assets that you own. For example, if you have several pieces of real estate and place each of them in an LLC and a land trust, there is no record associating you with the property. When it comes time for a creditor to unearth what you own, they may miss these assets entirely.
Lastly, your asset protection planner will help you establish an offshore asset protection trust. These trusts are set up in jurisdictions overseas, which makes them immune to the demands of U.S. judgment creditors. By carrying most of your wealth in this sort of trust, you’ll remain protected even if you lose a lawsuit.
Here’s a step-by-step guide detailing what you can do to stop your assets from being seized by a judgment creditor:
- Catalog all your assets, including cash, investments, real estate, valuables, and expected future income.
- Learn what assets can be seized by judgment creditors in your state, and identify any exemptions that apply to you.
- Assess your current legal and financial risk level considering your profession, asset types, and litigation exposure.
- Consider the need for urgent action if you are already involved in litigation or expect to be soon.
- Contact an asset protection specialist or attorney with demonstrated experience in shielding assets from creditors.
- Have your specialist set up an offshore asset protection trust. This takes time, so begin as early as possible.
- Transfer appropriate assets into the trust, documenting everything that is transferred.
- For real estate, create an LLC to hold your property, then make the LLC a part of the asset protection trust.
- Update all relevant paperwork to reflect that your real estate is now owned by the trust.
- Stay compliant with all reporting and tax requirements for your new asset structures to avoid penalties or inadvertent exposure.
- Consult with your asset protection advisor to ensure your plan adapts to any legal changes.
- If you have been sued, act quickly to implement remaining legal strategies for protecting your wealth.
- Maintain strict confidentiality regarding your asset protection strategies.
Learn more about how to avoid paying a judgment.
