When you have a past due debt, there is a possibility that your creditor could take legal action against you to recover the amount that is owed. Depending on your current financial status, if you are currently judgment proof, the actions the creditor takes might not have an immediate impact on you. If you are facing legal action from a creditor and think you are judgment proof, here is what you need to know.
What Is Judgment Proof?
Creditors have the option of going to court to obtain a judgment to force you to pay off a debt. If you fail to pay, a creditor can request permission to take further action against you. Some available options include wage garnishment, seizing some of your assets to sell, and placing a levy on your bank accounts.
However, if you are judgment proof, none of these actions will have an impact on you. Judgment proof essentially means that you do not have assets that are worth taking for you. For instance, if you do not own your home or have any equity in it, you could be considered judgment proof. The same would apply if you do not have a job or any other source of income.
Even if you receive state or federal benefits, such as Social Security, you could still be considered judgment proof. States usually have laws in place that exempt those benefits from being garnished by a creditor.
Does Being Judgment Proof Offer Permanent Protection?
Being judgment proof is usually a temporary condition. At some point, your financial situation will likely improve and your creditors can then go after your assets. For instance, if you find a job, a creditor could request a wage garnishment until your debt is paid off.
To protect yourself, you will need to consider other methods of handling your debts. One possible solution is to file for bankruptcy. A bankruptcy filing would give you an automatic stay, which would keep your creditors from taking such actions as the wage garnishment. The stay could provide the protection you need until the bankruptcy is completed in the court system.
If you are planning to file for bankruptcy, it is important that your financial situation is assessed by an attorney as soon as possible. An attorney, like one from Fitzpatrick, Skemp & Associates LLC, can determine if filing is the best move for you. If so, the attorney can help you determine which type of filing would be most beneficial.Share
14 July 2017