Leverage with Creditors – Enjoy Faster and Smaller Settlements: Part 1
January 28, 2013
By: Barry E. Haimo, Esq.
A creditor is a person or entity that wants money from you or your business. Read this post to learn all about creditors and why you need to know about them. They are lurking everywhere.
A legitimate claim will most likely derive from contract or tort law, which basically translates to a “civil wrong.” That means that either they or their property were harmed by you, your property or someone or something you are responsible for overseeing. The creditor is obviously displeased with the loss or damage that was caused and wants to be made “whole” again. It could derive from a car accident, slip and fall, breach of contract, physical altercation, medical malpractice or a variety of other ways. Don’t forget that insurance companies don’t like paying out money, and you just might simply not have enough insurance coverage. If your issue is unable to be settled or is otherwise unresolvable, your creditor may file a complaint against you. If they are successful, they will obtain a judgment, which will order you to pay them money or property that is owed. A settlement is always better than getting a judgment against you. Without planning ahead, there’s little you can do to prevent execution of a judgment against you. Moreover, regardless of whether their attempt to collect is successful, it will cost you money to defend yourself in court. That means attorneys’ fees and costs, which you know are expensive. Importantly, pursuant to Florida law, attorneys’ fees are awarded to the prevailing party if such is agreed in a contract or if mandated by statute. Shifting responsibility for legal fees and costs naturally has the effect of encouraging a settlement because of the significant amplification of risk.
Settlements are preferred by most parties, but you don’t want to engage in a “naked settlement”. It pays to have leverage.
Based on the above, I maintain that in a troubled economy coupled with an already overly litigious world, there are two things you need to do: first, consult a competent financial planner who understands how to best take advantage of creditor exempt assets. Second, since you’re likely to settle your claims, invest in an asset protection plan to arm yourself with as much leverage to settle them faster and for less money. Find out how and why 5 days from now in the next post.
Here are three more helpful posts on the subject.
- Asset Protection Planning 101 – Build Your Financial Fortress
- Asset Protection Planning 202 – Structure the Right Plan
- Asset Protection Planning 303 – Strategies and Pitfalls
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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