Can I Lose My Home in a Personal Injury Lawsuit?


Can I Lose My Home in a Personal Injury Lawsuit?

Personal Injury Info
Posted on Nov 15, 2023

What Does A Personal Injury Verdict Have to Do With Real Estate?


If someone filing a personal injury claim against you wins their case, you may be personally liable to pay their damages.

You may be wondering if you can lose your home in a personal injury lawsuit…

In Virginia, the answer is usually “no.”

If a judge or jury awards the plaintiff an amount in excess of your insurance coverage or if you do not have insurance, the plaintiff can seek a judgment against you and a property lien against your assets. You should always have insurance, especially if you own a home, so you have added protection from losing your assets.

The plaintiff’s lawyer will not get paid until you pay the damages, so they have incentive to seek legal action for nonpayment. Once the judgment is recorded in the county land records, it goes from an unsecured to a secured debt. If there is enough equity in the house or property, the judgment creditor may be able to force a sale of the home, unless the property is exempted as a homestead. You can also seek protection by filing for bankruptcy in some case.


What Is a Homestead Exemption In Virginia?

If you lose a personal injury lawsuit in court and do not have funds to pay the verdict, the court can force the sale of your home to satisfy the debt. Although it is relatively uncommon in Virginia, it’s understandable to worry, especially if the sum you are required to pay is steep or you live in an expensive home. There are several ways to avoid losing your home – exploiting the Homestead Exemption being the most common. Call the Rutter Mills personal injury lawyers to learn more about protecting your assets in court.

Virginia protects a set amount of value in a person’s home, like creditors, bankruptcy proceedings, and personal judgments. In this case, the plaintiff can only access what is left once selling fees, the mortgage balance, and the homestead exemption are applied. The exemption may be granted if the house is your main home and a spouse or dependents reside continuously in the home.

Residents can designate up to $5,000 worth of real estate as a homestead, plus $500 for each dependent. Residents 65+ years of age or married couples filing together can be exempt up to $10,000. For example, if the exemption is $10,000 and the home is valued at $110,000 and the mortgage on the property is $100,000, the house is exempt from seizure because the homeowner has $10,000 in equity in it.

A homestead declaration must be filed before bankruptcy to receive an exemption. It is best to work with an attorney if you are in a high-risk profession or immediately after an accident or legal issue arises to protect your assets.

Other Ways To Protect Your Home in a Lawsuit

Originally, spendthrift trusts were established to protect reckless heirs from squandering their inheritances to creditors. Unfortunately, this tool works best if the DAPT is in place 2-4 years before the judgment against you. However, DAPTs can also protect the home should the courts come after it.

Rather than subject the property to a lien, the defendant can remove equity by replacing it with a loan. Similarly, some homeowners create a shell company to place a lien on the property, giving the general impression that there is no equity. This strategy won’t hold up in a court battle, but it can sometimes dissuade lawyers or creditors from probing much further.

Twenty-four states, including Virginia, allow special protection for married couples. When a personal residence is titled as “tenancy by the entirety,” a single spouse cannot dispose of the property by their sole act. Further, a creditor cannot attach a lien to the property held by both spouses, and the title can pass from one spouse to the other following death without passing through the estate.

Putting the home in a spouse’s name can protect the domicile from seizure, particularly if the spouse works in a “high-risk” profession such as a surgeon or small business owner. However, this is another strategy best pursued before legal trouble arises.

Umbrella insurance protects clients from a wide range of possible scenarios. Generally, umbrella insurance will not cover fraudulent, criminal, reckless, or even negligent actions, but it depends on the specific policy language. This type of insurance can buy $1-2 million in coverage for $300-$500 a year.


Contact a Rutter Mills attorney to speak about your case today.

While it is unlikely you will lose your house in a personal injury suit, it is best to contact a lawyer immediately if you cannot pay the initial judgment.

Call or text us 24/7 at 757-777-7777 or fill out the contact form here to talk to a knowledgeable Rutter Mills attorney.

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