Why You're Not Really Judgment Proof

As more Americans face unemployment and are unable to pay their debts, the phrase, “judgment proof” is once again popping up in the lexicon of public discourse.  But does being “judgment proof” really mean and is anyone really judgment proof?  Well, in simple terms, to be judgment proof, is to be without assets or income that can be attached by a debt collector who has gained a judgment through the court system for the payment of a debt.

So if you’re unemployed, own no assets such as a home, or a fully paid for car, then you would be considered judgment proof.  In other words, a debt collector would not be able enforce the judgment against the debtor because the debtor has no assets.  But unfortunately a judgment doesn’t go away simply because a debtor as not assets and that takes us to the reasons why no one is really judgment proof:

  • You’re not really judgment proof if you plan to ever have a job or an income that is not exempt from seizure by creditors.  Unless you’re someone living on social security, who is retired or disabled and living in a home you don’t own, you’re probably not really judgment proof.
  • You’re not really judgment proof, if you plan to ever own any type of assets such as a car or a house.  Once you gain an asset that judgment can be enforced, and unless the asset is exempt, it can be seized by the creditor to satisfy the payment for the debt.

This is why we recommend that debtors facing lawsuits and judgments consider  bankruptcy.  Bankruptcy will wipe out debts associated with judgments and free the debtor from having to worry about future income and assets being seized by creditors.