If you have past due debts, a creditor can call you incessantly, but can’t actually make you pay without filing a lawsuit. If they are successful, the courts will grant them a money judgment for the amount that you owe. Once that has happened, the creditor will be able to go after your assets in a number of different ways in order to satisfy the amount you owe. However, there are certain situations which make you judgment proof so even then the collectors cannot collect on your debt.
Typically, you are considered to be judgment proof when you have nothing or own very little. Common reasons people are considered judgment proof include:
- A person has no equity in a home or any other sort of real estate.
- A person has very little personal property
- A person is unemployed or otherwise has a job that pays under the minimum wage.
If any of the above is true, typically all of the above, then the courts will consider you to be judgment proof. However, even if you don’t satisfy the above conditions, there are ways where you can still own property or have assets and become judgment proof. One good example is that states offer the ability for people to exempt small amount of property from creditors. This can include a modest car, some retirement accounts, and even household furnishings.
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