You receive a notice that creditors are suing you for an unpaid debt. You’re alarmed by the letter but truly don’t have the money to pay them. How do you handle this situation? The answer might be judgment proofing.
Judgment proofing is a non-legal term that refers to a circumstance in which a debtor is unable to pay the debts he owes. Being labeled “judgment-proof” means that a creditor attempting to sue the debtor cannot garnish the small amount of money and assets that debtor may have.
Judgment proofing is frequently applied to seniors and people with disabilities, as they often don’t possess any income or property which the creditor can legally go after. There are a handful of sources of income that a debt collector cannot take from a person, including:
- Social Security
- Supplemental Security Income (SSI)
- Assets loaded on to a Direct Express card or prepaid account
- Money received for child support or alimony
- Federal Railroad retirement, unemployment and sickness
- Federal Employee Retirement System
- Civil Service Retirement System
- Veterans Administration
To keep people from becoming destitute, two months of income derived from these sources is considered off-limits from debt collectors and can be kept in a checking or savings account.
It should be noted that there is a distinction between being permanently judgment proof and temporarily so. If you know your financial situation is going to improve in the future, you won’t be judgment-proof for long. When your fortune changes, the judgment against you may will likely still be valid, and you will no longer have the judgment-proof defense.
There are some collection circumstances that you cannot be judgment-proof against. When it comes to child support, alimony, criminal fines, and any money you owe the government, you are not protected by judgment proofing.
If you have a court judgment for unpaid debt filed against you that you cannot pay, it’s important to seek counsel from someone who can help you resolve the issue. ProAdvocate Group is a private membership association with a mission of teaching and supporting principles of the law that will help protect you. ProAdvocate Group offers a free initial consultation with no strings attached. Contact us today for more information about judgment proofing.