Legal Question in Insurance Law in California

Re: Fighting Subrogation

Ed gave you a very good answer although I would disagree with him about trying to settle so early. Subrogation cases are routinely filed without regard to liability and weak cases often disappear or can be settled for peanuts if you show some resolve and willingness to fight. I defend a lot of subrogation cases at a very low cost. If you are in southern California you are welcome to contact me and I will be happy to review your case in detail at no charge. A bankruptcy will also get rid of a subrogation claim and if needed I do that too, but it is still too early in the game to file a bankruptcy.

Re: Fighting Subrogation

Both the attorney's who have previously answered your

question seem to be painting a dismal picture.

Usually an insurance company will file a subrogation

claim against you just to scare you. They know that

9 times out of 10 you cannot afford to hire an attorney

and that if they badger you enough and drag you

through the legal process you will pay them what

they want. I would not settle with them or pay them

anything. I would not discuss anything with them

without an attorney present. They will try to trick you

into saying things that you do not meen. If there

is an attorney present he can protect your rights and

make sure that you are treated fairly. If a lawsuit

is filed against you, you can answer in pro per, but

have an attorney prepare the lawsuit for you. We had

a client who was in a car accident. She hired us

to file and prepare an answer to the lawsuit and help

her with the discovery. When it came time for the trial

she appeared on her own. The insurance company had an attorney.

In the end the judge had actually stood up for her

against the insuance company's attorney and she

won the case. This is the strategy I suggest to

people in this situation. It is low cost, but you

have an attorney looking out for your interests.

Give me a call if you are interested in this approach,

I would be happy to give you a free consultation.

My number is 805-546-9918 or email me with your phone

number and a convenient time to reach you. Good luck.

Re: Fighting Subrogation

Insurance companies routinely (and properly) bring suits like this to recover the money they pay their policyholders.

The insurer cannot "automatically" get your money; it stands in the shoes of the insured, and must meet the same burden of proof in court that the insured would have had to meet. Absent a judgment (or settlement) entitling it to your funds, it can't force you to pay. However, it will probably pursue you until one of the following occurs: (a) it takes you through trial and through any necessary appeals and then collects on any judgment it obtains; (b) you settle and pay the funds you agree to pay; or(c) you persuade it that its efforts are not worthwhile as you can't pay. For now, you will probably need a lawyer (whose fees alone my push you into bankruptcy).

Whether you can avoid paying a judgment by declaring bankruptcy will depend on your financial situation. Bankruptcy might seem like a good way to accomplish objective (c) from the previous paragraph, but you must understand that bankruptcy does not automatically erase your debts.

There are two primary types of bankruptcy used by individuals -- Chapter 7 and Chapter 13. Under Chapter 7, you give the bankruptcy trustee control over all your assets which (with some important exceptions) are then sold; the proceeds are used to pay your creditors as much as possible, and most remaining debts are then erased. Some debts cannot be erased; these include most student loans, punitive damage awards and court-ordered penalties, among others. If you are very far in the hole, then unsecured creditors may get nothing.

Under Chapter 13, the bankruptcy court would approve a repayment plan which would enable you to repay your debts (sometimes with discounts) over an extended period without requiring you to liquidate your assets. This type of bankruptcy would not enable you to avoid paying the insurer, although it would make the payments less onerous. You can't get Chapter 13 relief unless you are able to construct a realistic and workable plan; you may find yourself faced with a Chapter 7 liquidation if you can't satisfy Chapter 13 requirements.

Bankruptcy has some very serious and long-lasting consequences, and you should not file without carefully weighing the pros and cons of doing so. You also must be very careful not to try to hide any assets from the bankruptcy court or to make any "gifts" in order to reduce your assets. Such actions are criminal and can lead to imprisonment and heavy fines.

If you really can't afford to pay for the damages (in which case I don't see how you could have offered to pay the homeowner directly), bankruptcy might be the way to go. If you can afford to make the payment, maybe you should offer to settle now before the case costs you any more.