What Happens If You Lose a Lawsuit and Can’t Pay in Texas?

Perhaps you’ve been sued by another person and lost the lawsuit but don’t have the resources to pay what the court has ordered. What do you do?

This happens much more often than you might think.

Just because the court has determined that a defendant must pay a certain amount of money to the plaintiff doesn’t mean the defendant has any money or resources. In fact, the ability to pay does not factor into the legal decision.

For example, if you lost a lawsuit and were ordered to pay the plaintiff $20,000—but you don’t have the money—the plaintiff could file another lawsuit against you, asking that two of your vehicles (worth the $20,000) are transferred to their name. The plaintiff could also ask that the vehicles are sold at auction, and the money received given to you to satisfy your debt. Another step the plaintiff could take is to go through a collection agency. The collection agency will use all legal means to collect the amount you were ordered to pay.

What if you not only have no cash but also have few or no assets?

Perhaps you are deeply in debt, own no property, and are unemployed. This would preclude the court from garnishing your wages or selling an asset or assets to pay the judgment. Only specific assets can get seized in Texas, even when a judgment exists. If your assets are exempt, you are considered “judgment-proof.”

Perhaps you own nothing of significant value and either earn no income at all, or the income you receive comes from an exempt source. If all your debts are unsecured, all your income is exempt from garnishment, and the judge believes none of these things are likely to change in the future, you may be considered judgment-proof.

Even if you are considered judgment-proof, you could get sued, although whether anything of value could be recovered is an issue.

It is also important to note that the plaintiff cannot, on their own, take your assets. The plaintiff must first take legal action to have an asset seized and can only proceed once the court has authorized your request. These legal authorizations might include the following:

Monetary Judgment: A monetary judgment, known as a “levy,” allows a creditor to take funds directly from your account.
Judgment Lien: A judgment lien allows a plaintiff to take control of real property owned by the defendant (that is not exempt) or take the money owed from the sale of that property.
Secured Interest: A creditor may take possession of an asset of yours only if the creditor holds a secured interest in the asset (i.e., when you take a loan out on your car or a mortgage on your house, this is known as a “secured” loan because the property can be repossessed or seized if you fail to make your payments). Secured assets are not judgment-proof.

Other judgment-proof assets are those that the state of Texas believes to be essential to your life and well-being, including:

Household items up to $30,000 in value
Each licensed driver in the family may keep one vehicle
Your home (also known as your homestead) can be an urban homestead including up to ten acres or a rural homestead including up to 100 acres.
Other properties, including the tools of your trade, up to two firearms, two horses, bicycles, certain livestock and agricultural items, and sporting equipment, can be considered exempt.

Under Texas law, wage garnishments can only be used for debts such as past due child support or unpaid student loans. Most ordinary debts or private debts do not qualify for wage garnishments.

Freezing a bank account could be an option for a plaintiff. When a bank account gets frozen, only the money in the account at the time the account is frozen can be used to pay what the judge has ordered. Future wages cannot be taken. If you have exemptible funds in your bank account, the plaintiff must return those funds if they get frozen.

Some exempt sources of income include:

Benefits from Social Security
VA benefits
Payments from unemployment
Income for child support
Retirement benefits from the federal government

Many Houston civil litigation attorneys advise their clients to notify potential creditors that they are judgment-proof before the creditor initiates legal action.

Why Should You Contact a Civil Litigation Lawyer?

You might want to contact a civil litigation lawyer in Houston for several reasons. Some common reasons include the following:

You are involved in a legal dispute and need representation in court: If you are involved in a civil lawsuit, it is important to have a skilled lawyer to represent you and protect your interests. A civil litigation lawyer in Houston can help you navigate the legal process and represent you in court.
You need advice on a legal matter: Even if you are not involved in a lawsuit, you may still need legal advice from a civil litigation lawyer. For example, you may have questions about contracts, business disputes, or other legal issues that you need help with.
You want to take legal action against someone: If you believe someone has wronged you or your business, you may consider taking legal action against them. A civil litigation lawyer can help you understand your options and guide you through the process of bringing a lawsuit.
You want to protect your rights: Civil litigation lawyers are trained to help protect your rights and advocate for your interests. If you believe that your rights have been violated or are at risk of being violated, a civil litigation lawyer can help you take steps to protect yourself.

Overall, there are many different reasons why you might want to contact a civil litigation lawyer in Houston. Whether you are involved in a legal dispute, need advice on a legal matter, or want to take legal action against someone, a civil litigation lawyer can help you navigate the legal system and advocate for your interests.

Contact Our Houston Civil Litigation Lawyers Today

At Pathways Property Lawyers, our Houston civil litigation law firm is here to answer all your legal questions and help you protect your rights. Call us at 832-364-6234 or fill out our confidential contact form to learn more about your legal options.

Roger G. Jain

As long as I can remember, I have been inspired by courtroom drama. The story, regardless of who was fighting and for what cause, always came down to the very basic human traits of greed, jealousy, vengeance, deceit, ego, and pride. The skilled lawyer, always a good listener, could always find the heart of the case and convey it simply and eloquently to the jury and help the jury reach a just verdict. Read more here.