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You might not be familiar with the term “punitive damages” but you are sure they aren’t a good thing. Any time you’re talking about “damages,” something is wrong.

 

The truth is that punitive damages are a legal concept that can play a hugely significant role in your financial planning and can greatly hurt your family’s future if they’re not addressed. 

What Are Punitive Damages?

First things first, we need to have a punitive damages overview so we can plan for them and, hopefully, avoid them.

 

They are given to the defendant for reckless behavior and are usually created as a way to avoid any bad behavior in the future. As you can imagine, punitive damages can be really hefty and it may take years before they are finally paid off. 

 

Punitive damages are taken seriously by judges and the court system and should be by you as well. 

Impact On Families

For the families of the defendants, punitive damages can make life very complicated and, sometimes, impossible. 

 

There are certain kinds of damages, such as compensatory ones, that are covered by insurance. But that isn’t the case with punitive ones, which means that the defendant has to pay them out of their own pockets, which will eat into accounts such as savings, investments, and house funds. 

 

In many cases, the defendant is forced to liquidate assets, which means that long term investments in property or family matters must be sacrificed. There are even times when a defendant has to eat into their child’s college fund so they can pay for punitive damages.

Bankruptcy

Sometimes, the financial stress and problems caused by punitive damages lead to defendants having to declare bankruptcy. While that can be scary and daunting, it shouldn’t be avoided if it’s the only step that is possible to repair the financial ruin that a family has been left in.

 

Declaring bankruptcy is a long and complicated process and it can certainly cause stress and anxiety. But once it’s completed, the defendant will find a lot less stress and the feeling that their future is now wide open. 

 

However, it’s important to remember that bankruptcy will remain on someone’s credit report for ten years, which means it has long-term consequences that cannot be avoided. While it may be a smart move, it’s a highly impactful one. 

Saving While Paying

Now, it is possible to pay for punitive damages even when saving for a future for your family. You can still be putting money away as you pay off the damages handed down to you by the court. 

 

However, this requires a lot of work and it might not be possible without the assistance of highly-trained, expert professionals who know what they are doing and have worked in these sorts of situations before. 

 

It is vital that you confer with them, and your lawyers, to ensure that you are putting money away for your family while also paying off the damages on the schedule agreed upon with the court. 

Final Thoughts

Punitive damages are no joke and they can have a massive and damaging impact on you, your family, and your future. But they cannot be avoided, should always be taken seriously, and need to be viewed as the court order they are.

 

If you have to pay punitive damages, you shouldn’t be afraid. Just because the amount might be big, it doesn’t mean it’s insurmountable. With some careful planning, the hard work of trained experts, and diligence in your payments, you will be able to take care of your punitive damages while also ensuring that your family can rely on you in the years ahead.