If you’re being sued for a car accident, what someone can take from you depends almost entirely on two things: whether they win a judgment, and whether that judgment exceeds your auto insurance limits. Below your policy cap, your insurer pays and your personal property stays untouched. Above it, a judgment creditor can reach money in your bank accounts, a slice of your paycheck, real estate other than your primary home, and valuable personal property, while federal and state exemption laws shield categories like retirement accounts, Social Security, and a portion of home equity.
Insurance Absorbs the Hit First
Your auto policy’s bodily injury liability coverage is the first and usually the only thing a plaintiff can collect against. Your insurer is contractually obligated to hire a defense lawyer and pay damages up to your policy limits. A $100,000 verdict against someone with a $100,000 policy ends there.
The exposure starts above that line. If a jury awards $300,000 and your policy caps at $100,000, the insurer pays its share and you personally owe the remaining $200,000. Every question about what “they” can take is really a question about that gap.
An umbrella policy exists to cover it. Umbrella coverage sits on top of your auto or homeowners policy and typically adds at least $1 million in liability protection. If you own a home, have savings, or earn a solid income, it’s one of the cheapest forms of asset protection you can buy—and it has to be in place before the accident.
Nothing Gets Taken Until There’s a Judgment
Being sued is not the same as owing money. A plaintiff has no power to freeze your accounts, garnish wages, or lien your property just by filing a complaint. Those powers turn on only after a court enters a judgment, either from a trial verdict or an approved settlement, declaring you owe a specific amount. At that point the plaintiff becomes a “judgment creditor” with a real toolkit for collection.
What a Judgment Creditor Can Reach
Once a judgment is on the books, any asset that isn’t specifically shielded by an exemption is fair game. The most common targets are:
- Cash in checking and savings accounts, which is the easiest thing to grab through a court order served on your bank.
- A portion of each paycheck, diverted before it reaches you.
- Real estate other than your primary residence, including vacation homes, rental property, and vacant land, which can be liened or in some cases forced to sale.
- Valuable personal property such as boats, additional vehicles, and expensive collections, if they aren’t covered by an exemption.
Joint Accounts Are Not a Safe Harbor
Sharing an account with a spouse, parent, or roommate doesn’t automatically protect the money. In many states a creditor can levy the full balance of a joint bank account, and the non-debtor co-owner then has the burden of proving which specific deposits came from their own earnings or from exempt sources. If you’re the co-owner, you generally have to move fast, request a hearing, and produce the paper trail.
Sole Proprietorship Means No Wall
If you run a business as a sole proprietor, there is no legal separation between your business and your personal finances. A judgment creditor can go after business bank accounts, equipment, and receivables the same way they go after your personal property, because in the eyes of the law those assets are personal property. Operating through an LLC or corporation is the only way to change that.
What Exemption Laws Keep Off the Table
Federal and state exemption laws carve out property that creditors cannot take, even with a valid judgment. These are the categories that most often matter after a car accident case.
Home Equity
Most states protect some amount of equity in your primary residence through a homestead exemption. The range is dramatic. Florida and Texas allow unlimited equity protection subject to acreage limits. New Jersey and Pennsylvania offer no general homestead protection at all. Most states fall in between, with protected amounts running from roughly $5,000 to several hundred thousand dollars. If your equity is below the state limit, a creditor generally cannot force a sale. If it’s above, a forced sale is possible but you’d receive the exempt portion of the proceeds.
Retirement Accounts
Employer-sponsored plans like 401(k)s and 403(b)s get the strongest protection available. Federal law’s anti-alienation rule blocks creditors from reaching funds in these plans, both inside and outside of bankruptcy.1U.S. Department of Labor. FAQs About Retirement Plans and ERISA
IRAs are treated differently. Traditional and Roth IRAs aren’t covered by that federal rule, so outside of bankruptcy their protection depends entirely on your state’s laws, and the level of protection ranges from full immunity to almost none. In bankruptcy, federal law caps IRA protection at roughly $1.5 million (adjusted periodically), but that cap applies only inside the bankruptcy process. If you have significant IRA assets and are staring at a large judgment, this is worth reviewing with an attorney before anything is collected.
Government Benefits
Social Security, Supplemental Security Income, veterans’ benefits, and federal retirement and disability payments are protected from most creditors, and the protection follows the money into your bank account. When a creditor serves a levy, federal rules require the bank to review your deposit history and automatically preserve two months’ worth of direct-deposited federal benefits. If $1,000 in Social Security lands in your account each month, the bank has to keep at least $2,000 accessible to you regardless of the levy.2Consumer Financial Protection Bureau. Can a Debt Collector Take My Federal Benefits, Like Social Security or VA Payments?
Essential Personal Property
Every state exempts categories of everyday belongings. Dollar limits vary, but protected property commonly includes a primary vehicle up to a set value, tools of your trade, basic household furnishings, clothing, and health-related items. Most creditors don’t bother pursuing used furniture and clothing anyway, because the resale value doesn’t justify the cost of seizure.
Wildcard Exemptions
Some states, and the federal bankruptcy system, offer a “wildcard” exemption you can apply to any property of your choosing. Renters who don’t use the homestead exemption can often stack an unused portion of it onto the wildcard, protecting a larger chunk of miscellaneous property. State rules differ on whether the federal wildcard is available and what the state’s own version looks like.
How Collection Actually Happens
Wage Garnishment
The creditor serves a court order on your employer, and your employer withholds part of each paycheck. Federal law caps garnishment for a consumer judgment at the lesser of 25% of your disposable earnings or the amount by which your weekly disposable earnings exceed 30 times the federal minimum wage.3Office of the Law Revision Counsel. 15 U.S. Code 1673 – Restriction on Garnishment With the federal minimum wage at $7.25, that threshold is $217.50 per week; below that, nothing can be garnished.4U.S. Department of Labor. State Minimum Wage Laws Many states impose stricter limits than the federal floor.5Consumer Financial Protection Bureau. Can a Debt Collector Take or Garnish My Wages or Benefits?
Bank Levies
A bank levy freezes the account and eventually turns non-exempt funds over to the creditor. The creditor gets a writ of execution, serves it on the bank, and the bank freezes whatever is there. You then receive notice and a short window—often as little as ten days—to claim that specific funds are exempt, such as direct-deposited government benefits. If you don’t respond in time, the money goes to the creditor. Speed matters more here than almost anywhere else in the process.
Property Liens
A judgment lien attaches to your real estate and becomes a public record. It doesn’t force a sale on its own, but the debt has to be paid before you can sell or refinance.6Office of the Law Revision Counsel. 28 U.S. Code 3201 – Judgment Liens It’s a patient strategy. The creditor waits, and the debt gets paid when you eventually do anything with the property.
Judgments Don’t Go Away Quickly
Under federal law, a judgment lien on real property lasts 20 years and can be renewed for another 20.6Office of the Law Revision Counsel. 28 U.S. Code 3201 – Judgment Liens State court judgments generally remain enforceable for anywhere from 5 to 20 years, and most states allow renewal before expiration. A diligent creditor can pursue collection for decades.
The balance grows the whole time. Post-judgment interest accrues from the date the judgment is entered and is set by law, not by negotiation. Federal courts tie the rate to the weekly average one-year Treasury yield, which as of early 2026 sits around 3.70%.7Office of the Law Revision Counsel. 28 U.S. Code 1961 – Interest State rates are set by state law and are often higher. On a $200,000 judgment, even a moderate rate turns into tens of thousands of dollars in interest if collection drags on.
Moving Assets Around Makes It Worse
Transferring property to a relative for little or no money, retitling a vehicle in someone else’s name, or emptying a bank account into cash are textbook fraudulent transfers. Nearly every state has adopted a version of the Uniform Voidable Transactions Act, which lets a court reverse the transfer and pull the property back for the creditor. Transfers made after a debt arises get the closest scrutiny, but transfers made before suit was filed can also be unwound if the court finds they were designed to put assets out of reach.
The fallout goes beyond losing the specific asset. Courts can impose sanctions, hold you in contempt, or deny exemptions you would otherwise have been entitled to claim. In bankruptcy, knowingly concealing assets is a federal felony under 18 U.S.C. § 152, punishable by up to five years in prison and fines up to $250,000. Working with the process, painful as it is, is the better path.
If the Judgment Is More Than You Can Pay
Even after a judgment is entered, negotiation is still on the table. Many creditors will take a lump sum for less than the full amount, especially if collection looks slow or uncertain, and many will agree to a structured payment plan to avoid the cost of levies and garnishments. Get any deal in writing and make sure a formal satisfaction of judgment is filed with the court once you’ve paid.
Bankruptcy can discharge a car accident judgment in some cases. Chapter 7 eliminates qualifying debts after non-exempt assets are liquidated; Chapter 13 sets up a court-supervised repayment plan based on your income. One important boundary: debts arising from injuries caused by driving under the influence of alcohol or drugs cannot be discharged. If impaired driving was involved, the judgment will survive bankruptcy.
Some people have nothing collectible in the first place. If your only income comes from exempt sources like Social Security or disability, you have no significant assets, and you don’t own real estate, there is practically nothing for a creditor to reach. That status is often called being “judgment proof.” The judgment still exists, though. If your finances improve while the judgment is still enforceable, collection can start up again. Being judgment proof today doesn’t erase the debt.