“Judgement Proof” is not a really a legal term but a term that denotes that a person’s debt cannot be generally collected by creditors. It means that although a judge can issue a judgment against you, there is nothing for the creditor to collect.
Let us review how a creditor will usually attempt to collect a debt. First a creditor that you owe money needs to file a law suit against you for breaching a contract. In our area you will have to go to your local court house in St. Louis County or St. Charles County. If they are successful they get what is called a “judgement.” This judgment allows the creditor to collect the debt from you by force. They can use the judgment to issue a garnishment to an employer which instructs your employer to send them the money out of your paycheck. They are allowed to garnish up to 25% of your paycheck until their debt is paid off. They can also use the judgment to order your bank to send them any money that is in your bank account. This is called levying a bank account.
Finally, a creditor that has a judgment can also make their debt a lien against your home! That means they can use the judgement to get what amounts to another mortgage on house. That means that if you ever tried to sell the property that lien would have to be paid off. In some, circumstances they can then use this lien to foreclose on the property.
So when someone is “judgment proof” this means that a person is in a situation where the above actions cannot be performed.
Generally, for someone to be judgment proof, their sources of income need to be protected from creditors. That means the government has designated certain types of income that cannot be collected by creditors. These types of income include but are not limited to:
- Social Security Benefits;
- Unemployment benefits;
- Other Public Assistance benefits;
- Child Support;
So if your income falls exclusively in this these categories then creditors cannot enforce judgements against your income.
But wait, what if your income is protected but you own a home? Then the creditor can still put a lien against that property. Your income may not be able to be forcibly taken, but they can still try to get collect by going after your assets.
So to recap, you are judgement proof if your income falls within the categories outlined above and you do not have any large assets that a creditor could place a lien against. This does mean that creditors cannot get judgments, it just means there is nothing that they can get out of it.
So what does this mean as far as bankruptcy is concerned? Basically, if someone is judgment proof, since creditors cannot take their money directly some choose not to file. However, this does not stop the creditors from harassing debtors. They can still send you threatening letters and continue to call you asking for money for the debt.
Most people that are judgment proof still want to file bankruptcy to stop the harassment and to get their credit cleared up. The fees for a bankruptcy often give debtors much needed stress relief that their creditors are forced to leave them alone. Our firm’s experienced attorneys have handled several such cases and our clients report the relief that comes from the protection they get from the creditors.
If you have questions about whether or not you are judgment proof and if you should file bankruptcy anyway, or if you have any other questions related to bankruptcy, please do not hesitate to give us a call at 636-352-2030 or check out our website at www.klinelawstl.com. We have offices in both St. Charles and St. Louis County and the consultation is always free.