Do I have to file bankrupcy if I don’t have the money that I’m being sued for?

I got into an accident a year ago but I did not have car insurance a the time. I was at fault. Now I got a letter saying I am being sued for $11,000. I just got a decent job and I want to pay my car off. What can I do?

Asked on April 5, 2016 under Bankruptcy Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If you don't file bankruptcy, the person who is suing you could--if they can prove you were at-fault (e.g. driving negligently or carelessly in causing the accident)--get a money judgment against you. If you don't pay the judgment, they could then potentially:
1) Garnish your wages (or have money taken out of your paychecks);
2) Put a lien on any real estate you own;
3) Levy on a bank or brokerage (not 401k) account, or have money taken from it; and/or
4) Execute on valuable personal property, like a car, by having it seized and sold (though they can't do this if the car is being financed and you still owe money on it).
You may wish to either work out a payment plan you can live with, if you believe you are at fault, or else refuse to pay and when sued, try to prove in court that you were not at fault, if you think you weren't. If you can prove you were not at fault, you would not have to pay.
If you do lose in court and there is a judgment against you, at that time, filing bankruptcy may be a good option.


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