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if someone sues you can they take your house:

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What kinds of things can be taken?

If your creditors or a person you hurt wins a lawsuit against you, they could take your money, property, cars, boats, jewelry, and just about anything else of value. If you don’t have enough physical assets to pay off a judgment, you might have to give a portion of your wages to the person or business who sued you and won until they get what a court says you owe them.

Besides wages, other expected future assets can also be taken away. Some examples are commissions, royalties, tax refunds, insurance payouts, stock dividends, stock options, and even some types of trust income. Assets from the past that you recently gave to someone else could also be seized.

Edward Y. Lee, the principal trial attorney at the Law Offices of Edward Y. Lee in Los Angeles, said, “When lawsuits cause people to lose their assets, it’s usually because their insurance coverage isn’t enough and their unprotected assets are valuable enough that a lawyer for the person being sued has a reason to go to trial and get a judgment.” “Post-judgment collections usually lead to the loss of assets that are not protected.”

What kinds of money are safe from a lawsuit?

State law says that creditors can’t take some of your property, especially your main home. The National Consumer Law Center says that exemption laws are meant to protect consumers and their families from poverty, keep them able to be productive members of society and help them recover and get back on their feet financially (NCLC). Which assets you can protect and how much you can protect them vary from state to state.

The NCLC has five rules about how to protect family finances from creditors. Not a single state meets all five. Massachusetts and Nevada are the best states, while Georgia, Kentucky, Michigan, New Jersey, and Utah are the worst.

Find out more by looking at the list of properties that can’t be used to collect money judgments in your state. Here are a few examples of protections you may have.

Your house
If your homestead exemption is higher than the value of your home, creditors can’t force you to sell your home to get what they are owed. If the amount of your exemption is less than the value of your home, the creditor may be able to put a judgment lien on your home and force you to sell it. After the debts are paid off, any equity left over from the sale should go to the former homeowner.

The debtor’s home is usually safe from most claims under Texas’s property code unless the claim is related to a mortgage or property tax debt, home improvement or construction work, or the division of property in a divorce. The best homestead protections are in Florida, Iowa, Kansas, and Texas.

Retirement assets
The Employee Retirement Income Security Act (ERISA) is a federal law that protects retirement assets that are in retirement or pension plans. This law covers 401(k)s and pension plans as retirement savings.

State laws protect Individual Retirement Accounts (IRAs) and other plans that aren’t covered by ERISA in different ways. Once you take money out of a protected retirement account, you may no longer be protected from your creditors. But most of the time, these protections don’t apply when the lawsuit is about divorce.

Depending on your state, you might be able to protect some or all of the cash value in a life insurance policy you own. Income from an annuity could do the same.

Federal and state benefits
The Consumer Financial Protection Bureau says that debt collection lawsuits can’t be used to take back federal benefits like Social Security and Veterans Administration benefits that are paid by direct deposit.

Social Security isn’t just about getting money when you retire. It also includes survivor’s benefits, benefits for a spouse or child who depends on them, supplemental security income, and income for people who are disabled.

Transportation basics and other needs
You might be able to keep a personal car worth up to a certain amount of money. The same goes for furniture and appliances for the home, clothes, jewelry, and some things that are needed to make a living.

Basic income and the amount of money in a bank account
State laws may protect you from being poor by keeping creditors from taking a certain amount of money from your bank account.

Some of your wages are protected from creditors by federal law. States can make their own laws that are either more protective or the same as federal law.

What a romantic partner has to offer
Lee said that if you live with someone but aren’t married, their assets can’t usually be taken from them if you get sued. “However, it is a possibility in states that allow common-law marriage.”

After a lawsuit has been filed, how do you protect assets?

Laws vary from state to state, but in most states, courts can throw out certain transfers of money and property that you make after a lawsuit has been filed against you or even after you’ve been threatened with one.

Let’s say a creditor is threatening to sue your parents, and you want to know if they should give you their assets instead of risk losing them.

“If assets are given to adult children without fair compensation in return in order to avoid paying a possible debt, the transfer could be seen as fraudulent, the transferee could be held liable, or the assets could be taken back,” Lee said.

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