Judgments Don’t Go Away Even After Significant Time Has Passed
Often, people who have what they perceive as no assets, or who for whatever reason opt not to defend a claim against them or their business, make the decision to allow a judgment to be entered against them if they are sued. They often perceive themselves as being “uncollectable,” or worse, they may have their own misguided ideas about how they will “evade” collection of the judgment entered against them.
Judgments Can Last Forever
Florida law not only allows a judgment to survive almost forever, but to also affect your relatives, friends, and business partners, for years after the business is entered, if you transfer assets to them.
The lifetime of a judgment is twenty years. Although this seems like an extraordinary amount of time, it is even longer than it seems, because a judgment holder can file a motion to extend the life of the judgment before it expires. This potentially means that so long as the judgment holder keeps on renewing it, and it remains unpaid and outstanding, the judgment will last forever. It will not be extinguished by any statute of limitations.
Innocent Transfers Can Be Targeted
Sometimes people will purposely transfer money or property to others, or retitle assets or bank accounts, in efforts to avoid or evade judgment holders who come to collect their judgment. But there’s an entire separate category of people who may transfer assets innocently, with no intent to deceive or defraud a judgment holder.
In the course of our lives, we routinely and innocently sell or transfer our stuff to others. For example, someone may take their name off a bank account and put it in the name of a business or relative. Someone may sell an asset for regular income to live off of. Someone may sell investment property they have been holding on to for years. A business may be sold or transferred.
The problem is that as long as judgment is valid, the right to collect on it is valid. And because the judgment lasts practically forever, so does the creditor’s right to claw back whatever property the debtor sells or transfers. Years after you’ve forgotten about that judgment, the creditor could wake up, and try to collect on it—and that includes trying to undo any transfers or sales of property to others that you may have made.
It means that even the most innocent transfer of assets or property are at risk, and that those who you do business with may be at risk of getting sued themselves to have that property taken back to pay your judgment years after it was entered.
This is why asset protection is so important. Planning ahead to protect assets from a judgment can reap huge benefits. Asset protection is perfectly legal because it’s done before a judgment is entered against you, and is not property that is owned by the creditor or which it has a right to own.
Plan ahead now for potential problems that may occur later on. Contact Tampa business attorney David Toback to discuss protecting your business, assets and property.