Judgment Proof vs Bankruptcy

If you have no income, or your income is protected by state or federal law from garnishment. If you have no assets that creditors can get to, the judgment proof vs bankruptcy analysis should be conducted by a competent bankruptcy specialist.

Living a judgment proof life can be filled with harassment and lawsuits. Even if creditors can’t collect, that doesn’t mean they won’t try.

Judgment proof refers to someone who is not legally collectible. Creditors can’t take your social security. Nor can they garnish your unemployment. But they can sue you.

They can get a judgment against you. If you have real estate, they can slap a lien on your property. But they cannot take what is legally protected. So, in considering judgment proof vs bankruptcy, remember that income is not all creditors can take.

Judgment Proof Social Security

Creditors cannot garnish social security. Seniors who are retired, and social security income get sued all the time. Creditors have no way to know what your income is, or what your assets are. The will sue and get judgment first, and try to collect it later. They cannot collect from your social security income, however. This doesn’t mean they won’t try.

Creditors will sometimes “shotgun” bank account garnishments. This means creditors file multiple bank account garnishments. They hope to “get lucky” and hit your bank. If you are on social security, the bank might freeze your account, and you would have go to court and show the judge that your income is social security.

The court then orders the garnished funds released to you. You would not lose the money, ultimately, but it could be unavailable to you for a while and you would need to appear in court.

Judgment Proof and Unemployment

Creditors cannot take your unemployment, either.  But, the same thing can happen to your unemployment that happens to social security. They freeze your money. You end up going to court to show the judge that your money is protected. Warning!  If you are married and your spouse had money in the account, or if you have some unprotected money in the account, that money might be lost. It depends on the individual circumstances.

Unemployment comes to an end for most. Judgment proof status is temporary for many.  If you are unemployed and get sued, you might have nothing to worry about, for now. When you later become employed, you will want to examine your finances and see what kind of plan makes the most sense.

Creditors have no way to know your employment status. Your credit report does not disclose your employment. When you go back to work, you can be garnished, but the creditor will have to somehow figure out where you are working.

Judgment Proof and Protecting Your Property

Ohio has exemption laws that protect property in bankruptcy. These laws also protect you from creditors generally. It is very uncommon for creditors to try to satisfy judgments you owe by going after your personal property. Creditors will attempt to “attach” personal property sometimes.

Creditors often file liens in the county where you live, hoping you own real estate. Judgment liens “attach” to your real estate. Creditors get paid, plus interest, when the property is sold. We remove these liens in bankruptcy.

Judgment proof status often means no bankruptcy is needed. But many judgment proof clients I’ve had over the years file bankruptcy to put a legal and final end to the collection attempts, calls,  letters and general creditor harassment. They feel better, they tell me, knowing that they wiped out their debts. Finally gone, forever.

Judgment Proof Seniors

Some seniors file bankruptcy, even though judgment proof, so that their children can inherit their property without creditors making claims against their estate after their death.  In this way, the bankruptcy actually benefits their children, more than the judgment proof parent  who files. Even though the judgment proof vs bankruptcy analysis concludes that the parents don’t need to file, it’s the children we are trying to protect.

While there are a number of  different options for debt relief, one option, remaining judgment proof, is not one that many people can use. But if this is your situation, it’s a good idea to discuss it with a certified specialist. I often tell people not to file, because they are judgment proof. They are really grateful to know that they already have all the protection from creditors they need without filing.

If you are trying to compare judgment proof vs bankruptcy, call West Law Office for a free consultation.We offer in-office, video and telephone appointments. We can do your entire case online.

Call today; you’ll sleep better tonight.

We can do your entire case online.

Call (937) 748-1749 (Dayton  / Springboro) or (614) 852-4488 (Columbus).

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