"Judgment proof" isn't really a legal term, but it's an important concept. It describes a person whose income and assets are structured in a way that creditors — even with a court judgment — cannot collect from.
How Creditors Collect
When you owe money and a creditor sues, they may obtain a judgment. That judgment gives them tools: garnishing up to a portion of your paycheck, levying your bank account, or placing a lien on your home. If they succeed, they can take money by force of law.
Who Is Judgment Proof?
Federal law protects certain income sources from creditor collection. These typically include:
- Social Security benefits
- Unemployment benefits
- Other public assistance
- Child support
If your income falls entirely in these categories and you don't own significant non-exempt assets, creditors generally have nothing to collect — even with a judgment.
The Catch
Being judgment proof doesn't stop creditors from calling, sending letters, or filing lawsuits. The harassment can continue indefinitely. Many people who are technically judgment proof still file bankruptcy just to make it stop and clear their credit.
How to Know for Sure
Whether you're judgment proof — and whether filing makes sense — depends on the specifics of your situation. We offer free consultations at three locations. Call us and we'll walk through it with you.