If you sue someone with no money and win, you obtain a judgment against them, which is a legally binding court order stating they owe you the decided amount. While they may not have immediate assets to pay, this judgment remains valid and can be pursued for collection in the future.
Understanding the Judgment
When a court rules in your favor, it issues a judgment against the defendant. This judgment establishes a legal debt. Even if the person responsible has no money or assets at the time of the lawsuit, they still legally owe you the amount decided upon by the court. This doesn't mean you get paid immediately; it means you have a legal right to collect that money.
A judgment is typically valid for a significant period (often 10 years, though this varies by jurisdiction) and can usually be renewed, extending its life for many more years. This means the debt doesn't simply disappear if the person remains without funds for a while.
Challenges of Collection
Collecting on a judgment from someone with no money or assets can be challenging and requires persistence. This is often referred to as "winning the battle but losing the war" if collection proves impossible.
- No immediate assets: If the debtor truly has no bank accounts, real estate, valuable personal property, or steady income, direct collection methods will be ineffective in the short term.
- Bankruptcy: A debtor might file for bankruptcy, which could potentially discharge (eliminate) certain types of debts, including yours, making collection impossible. However, not all debts are dischargeable, and the court will scrutinize the debtor's financial situation.
- Time and expense: Pursuing collection can involve additional legal steps, court fees, and time, even without immediate payout.
Future Collection Possibilities
Despite initial difficulties, a judgment provides a long-term tool for collection. The debtor's financial situation can change over time.
- Wage Garnishment: If the debtor secures employment, you may be able to obtain a court order to garnish a portion of their wages directly from their employer. Laws vary, but generally, a percentage of disposable earnings can be withheld.
- Bank Account Levies: If the debtor opens a bank account or receives a lump sum of money (e.g., an inheritance, a bonus, or a settlement from another case), you might be able to levy their bank account to seize funds.
- Property Liens: If the debtor acquires real estate or other significant assets in the future, you can place a lien on that property. This means the property cannot be sold or refinanced without the lien being satisfied (i.g., you getting paid from the proceeds).
- Asset Seizure: In some cases, if the debtor acquires valuable personal property (like a luxury vehicle or boat), a court might permit its seizure and sale to satisfy the debt.
- Information Subpoenas: You can use legal tools, such as an "order of examination" or "debtor's exam," to compel the debtor to appear in court and disclose their assets, income, and financial dealings under oath. This can help uncover potential sources of payment.
Comparison of Collection Methods
| Collection Method | Description | Effectiveness (with no current money) |
|---|---|---|
| Wage Garnishment | Deducting money directly from the debtor's paychecks. | Effective if debtor gains employment. |
| Bank Levy | Seizing funds from the debtor's bank accounts. | Effective if debtor acquires funds in an account. |
| Property Lien | Placing a claim against real estate or other major assets. | Effective if debtor acquires property in the future. |
| Asset Seizure | Taking and selling debtor's personal property. | Effective if debtor acquires valuable assets. |
| Debtor's Exam/Info | Court-ordered questioning of the debtor about their finances. | Useful for uncovering future or hidden assets. |
Is Suing Someone with No Money Worth It?
The decision to sue someone with no money depends on your goals and the specific circumstances.
- Principle: Sometimes, individuals pursue a lawsuit out of principle, even if immediate financial recovery is unlikely.
- Future Recovery: If you believe the debtor's financial situation will improve in the future, obtaining a judgment now can position you to collect later.
- Legal Leverage: A judgment can serve as leverage. For example, it might complicate the debtor's ability to get loans, buy property, or even affect their credit score, potentially motivating them to settle the debt if their circumstances improve.
- Cost vs. Benefit: Weigh the legal fees and time involved against the realistic possibility of recovery. For small claims, it might be more feasible, but for larger sums, the costs can add up.
Even if a person currently lacks funds, a judgment ensures that they remain legally obligated to pay the debt, allowing for future collection efforts when and if their financial situation improves.
