Home Ownership VS Lawsuits - Home loan as buffer?

Hello - I run a business, and while I feel that my risk for a lawsuit is low - there is still risk of one.

I was told that if I owe any money on my home (even a home equity loan payment) - that someone who is sueing me can not go after my home - since I guess a bank has an interest in it.

Is this true? Or does this vary state by state? I am in NY, and may be in the position shortly where I will be able to pay off my home loan.

I am wondering if I should pay it off, then immediately get a home equity loan for a few thousand.

LordX said:

someone who is sueing me can not go after my home - since I guess a bank has an interest in it.

Is this true?

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No, it is false.

LordX said:

Or does this vary state by state?

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No need to talk about those other 49 states, you live in NY state, friend.

LordX said:

I am in NY, and may be in the position shortly where I will be able to pay off my home loan.

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Good for you, buddy.

We did that about 20 years ago.

It is great living life debt free.

LordX said:

wondering if I should pay it off, then immediately get a home equity loan for a few thousand.

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You are the captain of your life, mate.

You, and you alone, must decide if that works for you.

LordX said:

I was told that if I owe any money on my home (even a home equity loan payment) - that someone who is sueing me can not go after my home - since I guess a bank has an interest in it.

Is this true?

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No. Putting aside the fact that anyone can "go after" anything, any equity that you have in your home is potentially at risk. As a practical matter, creditors almost never seek to enforce an ordinary civil judgment against the judgment debtor's equity in a personal residence because there are significant limitations and procedural hoops to jump through.

LordX said:

does this vary state by state?

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Yes. Some states (the two that spring immediately to mind are Florida and Texas) exempt all of a judgment debtor's interest in his/her personal residence from enforcement of a civil money judgment. That's why, prior to a foreclosure, OJ Simpson was able to keep his swaggy home in Florida despite having what is, by now, a high eight-figure judgment against him for killing his ex-wife and her boyfriend.

In a state such as New York, the best way to protect your interest in your home is to carry appropriate liability insurance for your business.