What Does Being Judgment Proof Mean?

by Betty
(North Carolina)

What does it mean to be judgement proof, and how do I know if I am? Thank you.

Reply from DebtCollectionAnswers.com:

Great question Betty! This term isn't really a legal term, but it's used to describe a situation where you don't own any property that could be seized or attached by creditors. The idea is that if you are sued, the creditor or collector might successfully get a judgment against you, but wouldn't really be able to go after your bank account or other property to get paid right away.(Property may include wages, a home, car, or other things you own.)

Being judgment proof doesn't mean you can't be sued - or that a creditor or collector can't get a judgment against you. Sometimes creditors will sue in order to get a judgment so they can try to collect in the future. In most states, judgments last a long time and can be renewed. That allows the creditor or collector to try to collect for a longer period of time since, without a judgment, the statute of limitations may expire on a debt.

However, if you are "judgment proof: and you let the creditor or collector know that, they may decide it's not worth incurring the expense of taking you to court. Over time, the statute of limitations may then expire on the debt so even if they tried to collect at a future date, they may not be able to do so.

The best way to find out if you are judgment proof is to set up a a consultation with a bankruptcy attorney in your state. The bankruptcy attorney can review your financial situation and tell you whether property you own may be at risk. The attorney can also help you decide whether filing for bankruptcy would be a good idea to put the debt behind you.

Again, even if you do not have any way to pay the debt now, a creditor or collector may still decide to sue you and may be awarded a judgment.