This entry was posted on Friday, July 6th, 2007 at 2:29 am and is filed under Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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I found some comfort in seeing that the lawsuit filed the other day against Casey Serin appears to have dropped the names of the posters of comments on IamFacingForeclosure.com from the suit. This makes it slightly less frivolous I suppose.
One should realize that lawsuits occur ALL THE TIME here in the United States, with Debt Collectors and their attorneys abusing small claims court to enforce debts and often seize assets. Considering that several commentators were nearly sued for just posting comments anonymously on a Real Estate Blog, chances are high that you or a loved one will find yourselves involved in a lawsuit at some point in your lives. Here are a few steps that you can take to protect yourself BEFORE you get sued, so that if and when it happens, you’ll be better off than most.
1. Maintain your privacy.
Attempt to keep your private life as private as possible. Having your private information listed in a phone book, or even in a domain Whois registry will make it very easy for people to discover your private address, number and likely a whole lot of other information very quickly. You don’t need to hide in a compound out in the Dakotas, but you certainly shouldn’t do as Casey Serin did, and publicly blog about breaking the law.
2. Don’t give anyone your information without a reason.
Recently at a Best Buy I attempted to purchase a VOIP phone in order to have a phone line for my new place. The checkout clerk asked for my private information, starting with a demand for my phone number. As he didn’t state a reason for wanting such information, I politely told him I didn’t want to give him my private info. He angrily stated that I HAD to give him my phone number in order to purchase this. I politely pointed out the irony in his demanding I give him a phone number when I was purchasing a device that was meant to provide me with a primary phone number, and told him I didn’t have a number, and furthermore, didn’t understand why he was demanding this information anyways. He was furious! He called his manager who instead of attempting to mediate, echoed the sales clerk’s position, that I HAD to provide a phone number. After refusing, they both begged me to just ‘make one up’ so that they could clear out the quickly growing line behind me.
3. Get a VOIP number.
Having a fairly anonymous number (such as the ones provided free by GrandCentral) provides you with normal phone service, and the protection of not having a major phone company list you regularly in the phone book, as well as sell your number to unknown volumes of telemarketers. Having a phone number in a different area code will make tracking you down based on your phone number a much harder task.
4. Keep your work address and your home separate.
Get a PO box, or better yet a box with a postal supplies store like the UPS store. While these services generally require genuine identification information…what was true when you signed up, can always change later on 
. Additionally this provides an added blanket of protection from potential threats. This also keeps your mail from being easily stolen or gone through. Keeping your primary residence separate from your name can provide great protection (and in order to do so, you should make sure the DMV, IRS and everyone else only has your PO box address).
5. Don’t bank local.
Thanks to the internet, it has become fairly easy to open a bank account in another state. When someone is building a lawsuit, they will generally scour the local banks to find accounts with your name, so that they can have the courts seize the accounts should they win a judgment. ING Direct provides an excellent and free Online Checking Account (have a friend with an account refer you to get a $25 bonus..or ask me to!). The last thing you want your bank to ever see is a writ of garnishment…which is what Cashcall will likely be sending to every employer and bank that Casey and his wife have dealings with. Don’t let it happen to you. Do NOT keep your savings/checking accounts with the bank you have a credit card with or they may SEIZE YOUR MONEY without even going to court in order to pay your credit card debt.
6. Plan BEFORE anything adverse occurs.
The best time to start preparing and protecting your assets is YESTERDAY. If you wait until you’ve lost a suit, there is very little you can do. If you take action now, and plan wisely to protect your assets you leave yourself well protected, and also diminish your own likelihood of getting sued.
7. Own Nothing. Control Everything.
Property should never be in your name if it can be helped. Having several large assets in your name is like wearing a shirt with a bullseye saying “Sue Me!”. Anything in your name can be found easily, often with a simple internet search, and just as easily sued for! Whenever possible avoid having your car, home, boat, or any other valuables in your own name. Whenever this proves impossible, split assets, with your significant other’s name so as to limit possession.
8. Know an attorney.
Having someone you can call to give legal advice can prove invaluable, and protect you from making serious and costly mistakes. Always talk to an attorney before entering small claims court, or whenever you receive a threat of legal action. Never sign a contract without having one look it over. A bad contract could not only prove expensive, it can be downright embarrassing if ever examined by court.
9. Get an LLC or a Corporation.
This is a more costly suggestion, as it generally takes a few hundred dollars (use the attorney you met in step 8 ) to do, but if you already own, or intend to own property such as a home, it can be an invaluable defense against suits. While a court can certainly separate an LLC from its property and attach it to you, it’s difficult, and therefore going to be more costly for a plaintiff to accomplish in court. Making things difficult is the key to saving your home from being seized should you lose a lawsuit.
10. Use HELOCs to make it appear as if you have no equity in your properties
Home Equity Lines Of Credit, when untapped, can be used creatively to make it appear as though you owe the bank far more on your home than you actually do. You’re less likely to be sued if your home seems like more debt than equity. Owning a home outright is just an invitation for someone to sue and try to take a piece of that sweet equity beyond the portion your state protects.
read comments (9)
July 6th, 2007 at 2:47 am
Very interesting list. Some seem a little much, but I guess it’s better safe than sorry. Thanks!
July 7th, 2007 at 5:47 am
I generally agree with 1 to 6. #4: DMV’s and other state/federal agencies won’t accept PO BOX’s anymore. #5: If you can help it, don’t pay anyting with a check or debit card. If you must, do it out of a smaller account. Handing out a check is handing someone all of your personal banking information. Also, many companies store the information on a check so that if you default on an agreement and they sue you and win, they know your account information and can ask the judge to freeze it. Any check I get from a tenant or customer is photocopied before deposited.
#7&9: Why not just get personal liability insurance? It’s a lot cheaper and easier then setting up various LLC to hold your assets.
July 7th, 2007 at 7:56 am
Overall, excellent advice. As far as number 10, unless you want a Heloc anyway, this is not necessary. Its less costly to just put your home into an LLC, or alternatively record a big huge trust deed with your LLC as beneficiary.
July 7th, 2007 at 9:52 am
I have an idea - don’t accrue ridiculous amounts of credit card debt. Then you can safely bank locally. The bank won’t seize “your” money unless you are in default to them regarding repayment of THEIR money.
What a terrible list.
July 7th, 2007 at 10:32 am
Whether you have credit or not, people can still win a suit against you and garnish your accounts. Essentially, they get a court order for the bank to seize the money.
As far as personal liability insurance, what will you do if they deny your claim, or worse, you exceed the coverage.
UPS stores and other mailbox providers provide real addresses, which can be invaluable if you need a non PO Box address. Good advice would be that a person should check that out before deciding where to ‘box’.
Some Helocs are no fee, and while I agree that they are less necessary for a home under LLC, it would serve to greatly impede anyone wishing to sue, assuming they got as far as connecting an LLC to your name.
July 9th, 2007 at 7:50 pm
I read some of this post but found the white writing on black background to be hard on my eyes. Switching to this page with blues took me a moment to adjust. I think this is a site I would revisit but only in small sessions.
July 10th, 2007 at 12:30 pm
If your insurance denies your claim, you have bigger problems. If you have a reputable insurance company and they deny a claim you have options for appeal. Although sometimes they try, insurance companies can’t just deny someone insurance if it falls within the contract. When they do, they typically get taken to court and are over matters that are unclear or unspecified within the contract. For example, was it wind damage or flood damage?
But, let’s assume that you have an LLC or Corporation called XYZ. You get sued for $50zillion dollars and a judge asks you to list your assets. Included in your assets is your XYZ corporation. Do you think he’ll tell you to turn over the assets of your corporaton? Probably. What do you think a judge is more likely to tell you to turn over: A house you own or a corporation that happens to own the house you are living in?
Corporations are good for protecting assets in other situations. For example, if say you own rental properties and you move them to an REIT that owns and manages the properties, you can’t take personal loses (your own home) for mistakes that the REIT were sued for. But if your sued personally, the courts can order your assets to be sold to resolve the claim.
July 10th, 2007 at 6:12 pm
“I have an idea - don’t accrue ridiculous amounts of credit card debt. Then you can safely bank locally. The bank won’t seize “your” money unless you are in default to them regarding repayment of THEIR money.”
What the heck is Thing1 talking about? This isn’t about credit card debt - it’s about protecting yourself from lawsuits. Reading comprehension, people, reading comprehension…
July 20th, 2007 at 7:37 am
I used to have the number to the White House memorized. When asked for my phone number,I’d give them that one.