Q: In a personal injury case, I'm being sued, can they take my military disability compensation income? Or retired income?

A: i would hope that you have car insurance and your insurance company is defending you. The majority of these case will settle at or below your policy limits assuming you have insurance. If the damages were very severe and could exceed your policy limits you could be at risk.

You can discuss your risk exposure with an experienced personal injury Attorney (who can explain how your insurance should work to protect you) and with an experienced bankruptcy Attorney who can discuss whether your assets are at risk and how best to protect yourself. Generally speaking disability income and retirement income are protected from creditors by federal law. You should of course verify that your specific type of retirement is within the types protected when you meet with a bankruptcy Attorney. Understand that you can get advice from a bankruptcy Attorney without actually filing bankruptcy.

Your house is another matter. Oregon unfortunately doesn't have a very good exemption for debtors for protecting real estate. Maybe it was adequate 40 years ago but it hasn't caught up with today's real estate values. So the protection a single debtor is $40,000.00 in home equity and for joint married debtors it is $50,000 in equity. Any portion of your home which is a mortgage debt isn't counted. If your house is jointly owned by you and a spouse and your spouse is not party to the debt, then your spouse has 1/2 of the house value and that can't be touched by creditors.

So let's say you own a house with your spouse worth $350,000 but you still owe $200,000 on the mortgage. That means that there is $150,000 net equity above what is owed on the mortgage. Your spouse is entitled to $75,000 of that. So your exposure would be $75,000 less $40,000 which equals $35,000.00. But if you file a chapter 13 bankruptcy you can show the court an even lower net value because you get to further deduct the theoretical cost of selling your house before the creditor would get any money. So let's just assume for this example that the cost of sale you could further deduct is $10,000. (It could be more, I just picked a number for this example.) Then your net exposure would be $25,000. In a chapter 13 your bankruptcy Attorney would come up with a payment plan where you pay the equivalent of $25,000 to all your creditors, not just the personal injury creditors, over a 3 to 5 year plan. That will allow you to keep your house. It wouldn't matter if if the personal injury judgment/debt was a lot more money. You only owe up to the extent of your non-exempt assets.

Do not under any circumstances start moving your assets around without first getting sound legal advice, because you are worried. That is usually the worst thing you can do. For example if you transfer the title of your house to a friend or relative to "hide" it, a court can set this transfer aside and you will have lost your exemption of $40,000.00. So self help in this type of situation is very risky. Don't do it.