October 12th, 2009 by Reed Allmand 
If you’ve been hanging around any of the debt or bankruptcy forums, you’ve probably run across the phrase “judgment proof.” But does it really mean? When a debtor is judgment proof, it usually means that he/she does not have assets that can be liquidated even if a creditor has a judgment against the debtor. For example, if a debtor has no job and does not own a home or other assets he/she is most likely judgment proof.
You are probably “judgment proof” if you…
- Have no assets that can be liquidated, such as a car, house or stocks/bonds.
- Have no income that can be garnished by creditors. This may also apply to those receiving social security payments.
If you have no assets or income that can be seized by a creditor, should you still file bankruptcy? You may want to still consider bankruptcy even if you’re judgment proof if the following applies to you:
- You plan to eventually work and earn an income.
- You plan to own a home.
- You plan to eventually own other assets.
- You want relief from creditor phone calls, letters and lawsuits.
- You owe a significant amount of money to creditors.
Filing bankruptcy not only protects your current assets, it can also protect future assets and income. Some debts are collectible for up to 7 years, while others such as student loans can be collected for as long as the debtor is alive. Relying on your judgment proof status to handle creditors is usually not a long-term solution if you are planning to earn an income and own assets anytime in the future.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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