I’m Judgment Proof!


What does it mean by being judgment proof? Does it mean you don’t have to pay your bills?

Most people who are “judgment proof” have a misconception that they should just forget about the debt.   People who are judgment proof have no assets that can be liquidated (house, car, stocks, etc) and have insufficient income that can be garnished.   Translated into English, this means that a creditor has no means to collect on the debt.   Some states go by Federal guidelines to determine the amount that can be garnished, while other states have their own set of rules.   Being “judgment proof” does not mean you are “lawsuit proof.”   A creditor can still sue in court and win a judgment.   A lot of people ask me, “If I’m judgment proof, should I just forget about this debt?”   The answer is, it depends.   Let’s look at the example below.

Here’s an example:   John has $15,000 in debt with Bank of America.   He is fresh out of college and is looking for a full time job.   He currently is living at a friend’s place paying him rent until he finds employment.   He finds a job at a local retail store making minimum wage.   He falls behind on his credit card payments and creditors start their usual collection process.   Phone calls come in.   Hordes of collection letters pile up. And then one day, he receives a summons!   The creditor wins in court and now John has a judgment against him.   The creditor sends a letter to his employer requesting to withhold wages, but the creditor soon finds out that he doesn’t make enough money.   John joyously celebrates thinking he’s off the hook and doesn’t have to pay the creditor.   After months of thinking he’s “debt free”, John finds that perfect job he was looking for.   The creditor finds out that John is now making substantially more income and orders his employer to withhold wages.   So long for being judgment proof!

So what’s the moral of the story? Don’t be fooled into thinking that you can just forget about a debt just because you’re judgment proof.   A judgment does not just go away simply because you don’t have assets or income.     You’re not really judgment proof if you ever plan to have a job or income that isn’t exempt from seizure by creditors OR if you ever plan to own any assets such as a car or home.   Once you gain access to these assets, a judgment can be enforced and seized by the creditor.   However, people on Social Security & Disability who have no tangible assets are the ones who can be considered “100% judgment proof.” A creditor cannot garnish SSI or disability.

So let’s recap:

1.             Being judgment proof doesn’t mean you can’t be sued

2.             If you plan to have a job with more income, the creditor can garnish your wages

3.             If you plan to buy property or have any assets, the creditor can seize your assets

4.             If you are on SSI or disability with no assets, you are essentially “100% judgment proof”

As always, feel free to ask me any questions!



2 Responses

  1. Kimberly

    March 30, 2011 11:29 pm


    I was recently called by several debt settlement company and not sure whether based on your article above whether debt settlement is right for me and if so whether I should go through an attorney or another alternative? I was thinking attorney’s are a safe bet considering they will represent me and understand the process with getting sued and all…. thoughts?


  2. Kevin

    March 31, 2011 4:30 pm

    Hi Kimberly,

    It can definitely be stressful trying to figure out which debt relief option is best for you. It all depends on your specific situation. I wrote an article on how to determine which option is best for someone in debt. In regards to the whole attorney situation, most attorneys will charge an upfront retainer to start the process. Personally, I don’t think it’s worth it. Keep in mind that even if you go the attorney route, they won’t be able to magically make the debt go away in court. They will simply help you write an “answer” to the summons. You can go to http://www.debteye.com and go through the registration process to see which debt relief option is best suited for you.


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