"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 puts certain income sources out of a creditor's reach entirely.
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.
What a creditor can and cannot reach
Federal law puts certain income out of reach, even when a creditor holds a judgment.
They can't touch it
- Social Security benefits
- Unemployment benefits
- Other public assistance
- Child support
They can come after it
- A portion of your paycheck
- Money in your bank account
- A lien placed on your home
- Significant non-exempt assets
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 two locations. Call us and we'll walk through it with you.