Is It Worth Suing Someone With No Money?

  • Time to read: 5 min.

Answer: It might. But then again, it might not.

In the article that follows, we’ll discuss the pros and cons of pursuing someone who doesn’t have money to pay the judgment.

Is It Worth Suing Someone With No Money? (Explained)

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Pros of Suing Despite Lack of Funds

There are several reasons why lawyers would recommend moving forward with obtaining a judgment against someone who was currently insolvent.

First, if the opposing party is unable to pay the judgment, he might also be unable to afford an attorney to aggressively defend against the plaintiff in the case.

This might not always be the case, and strategically it might make sense to move forward to ‘win’ and get a judgment now, than risk losing later.

Not to mention that the case might even cost the plaintiff move to pursue if the defendant had ready cash to spend to defend.

Second, the plaintiff might have to sue now because of the upcoming statute of limitations.

While a plaintiff might want to wait to see if the defendant ever comes into money (via work, inheritance, marriage), the timelines built into the law can make it difficult.

The statutes for individual civil causes of action vary from state to state, so checking the laws in the state where the case might be filed is really important. (This might not always be your state, by the way!)

Third, judgments often last a long time. Many states allow for the renewal of a judgment. If the defendant doesn’t have money now, it doesn’t mean that this will always be the case.

The defendant might go to school, get a good job, buy a house, get married, build up a retirement portfolio, start a business, or receive an inheritance.

The defendant might eventually have some assets that could be used to pay for the judgment, or the plaintiff could force to a sale to get paid.

Fourth, the defendant might not have money, but he might have other assets that the plaintiff doesn’t know about (yet).

Armed with a valid judgment, the plaintiff can lawfully investigate the defendant’s financial affairs, and even compel him to disclose the natural of his other assets and accounts.

The investigation could reveal some property that the plaintiff could then move to liquidate.

Fifth, the unpaid judgment accrues interest at a rate set by statute, often higher than even some credit cards.

If it seems likely that the defendant will eventually pay the judgment, the ultimate value tendered to the plaintiff could be more because of the accursed interest.

Cons of Suing Despite Lack of Funds

There are several reasons why lawyers would recommend against moving forward with obtaining a judgment against someone who was currently insolvent.

First, the plaintiff could be throwing good money after bad.

Legal actions cost money, in filing fees, service fees, and other costs.

There is no guarantee that these fees (along with the judgment money award) will ever be paid back.

Once there is a judgment entered against a defendant, he may go out of his way to avoid gainful employment because those funds can be garnished.

He may look for under the table work.

He may move away or otherwise make himself difficult to find.

He might not use bank accounts or other financial institutions to avoid garnishment.

He might even avoid buying a house or acquire other assets in his own name.

The plaintiff would have paid out even more of his own money to try and recoup other monies that never get paid back.

Second, the defendant might declare bankruptcy.

This is a different kind of avoidance on the part of the defendant.

Not only would the plaintiff not get paid back, the judgment (and all efforts to execute it) would be held in abeyance during the bankruptcy.

Then, at the conclusion of the bankruptcy, the plaintiff’s judgment could get discharged, meaning the defendant could go forward with a clean slate while plaintiff got little or nothing.

Not all debts are dischargeable.

But many are, and it would behoove a plaintiff to confer with their attorney about the risk of bankruptcy (soon or in the future) before pursuing a judgment.

Other Creative Uses Of a the Debt

An un-collectable debt can be annoying, frustrating, or even devastating.

A debt can be used as an asset.

For example, the forgiveness of the debt could be used as a carrot to obtain something else the plaintiff wants from the defendant (like a straight trade).

The debt could also be treated favorably in the tax code, and could potentially be used to offset some other gains in a given tax year (talk to your CPA before doing anything with this in mind).

Finally, winning the judgment might just feel good to the plaintiff.

Even if the plaintiff knows that he’ll never see his money, taking the defendant to court and getting the judgment could be all he needs to be satisfied by the outcome.

Thinking About Suing Someone To Obtain a Judgment?

Depending on the case, you might want to speak with an attorney or law firm that specializes in collecting unpaid debts.

If the case is still in the phase where the bad acts giving rise to the debt need to be proven (or will be difficult to prove), conferring with a law firm that handles civil actions in the practice area is also a good idea.

If you need specific guidance in your situation (like help with self-representation), contacting an attorney in the case’s practice area in your jurisdiction (where your court is located) can help you get your questions answered and help put your case on track.

Wrap Up

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Is It Worth Suing Someone With No Money