Is There Any Such Thing As a Truly Judgment-Proof Debtor?


Debt collection agencies in our industry need to always be cognizant of the judgment-proof debtor. Though legitimately judgment-proof debtors are the exception to the rule, they are out there. When we run into one, trying to collect on their debt is usually not worth it. There are reasons that an individual is considered judgment proof.

The most basic definition of being judgment proof is being in a situation in which you legitimately have no financial means to pay what you owe, nor do you have any valuable assets or future prospects. For all intents and purposes, you are that proverbial stone from which a creditor cannot get blood. The trick for judgment creditors is to figure out if someon claiming to be a judgment-proof debtor actually is.

Things That Suggest Being Judgment Proof

There is no static litmus test we can rely on to determine if a debtor is legitimately judgment proof. But there are things we can look for. There are signs that suggest a debtor has no means to pay nor is likely to ever have said means. Here are a few examples:

  • Low Income – A debtor with limited income may be immune from wage and bank account garnishment for all intents and purposes. Most states limit the amount that can be garnished under either scenario, so garnishing may not be possible if the debtor’s income is too low to begin with.
  • Limited Assets – A debtor with little to no valuable assets could be judgment proof in the sense that there is nothing a creditor can go after to obtain payment. Uncooperative debtors with no assets are very difficult to collect from.
  • Persistent Unemployment – Persistent unemployment can make a debtor judgment proof in the sense that not being able to hold a job limits the debtor’s future prospects. Low income and few assets will continue to be problems.

Along with these three particular things, we pay attention to any past efforts a debtor may have made to avoid paying. A debtor willing to go to any length to not settle his debt is certainly more challenging to collect from. If you combine a willingness to fight with any of the other three conditions, collection will not be easy.

The Illusion of Being Judgment Proof

Earlier you read about the challenge of determining whether a debtor truly is judgment proof. Again, there are reasons. For example, experienced judgment debtors who have been to multiple debt collection rodeos may know how to create the illusion of being judgment proof by hiding assets and providing incorrect employment information.

Other debtors might not know how to do it themselves but quickly learn with the help of their attorneys. The two work together to paint a picture of poverty without any prospects. And if they can pull it off, the chances of their creditors giving up and walking away increases.

Outsourcing Is the Best Bet

There is really no way to determine whether a judgment debtor is truly judgment proof without actually starting the collection process. There is also no guarantee that someone who appears to be a judgment-proof debtor is legitimately so. For these two reasons, we encourage creditors to outsource debt collection from the very start.

Here at Judgment Collectors, collecting outstanding judgments is our business. Let us take on the chore of contacting the debtor, getting employment information, verifying income, etc. Let us handle digging around for assets and making contact. The last thing you need is the hassle of dealing with a debtor trying to avoid payment.