Winning a civil judgment against another party can seem like an impressive accomplishment. But it is nothing compared to actually collecting. The chances of getting paid are not as high as a lot of people think. Why? Because it’s not unusual to encounter debtors whom attorneys describe as being ‘judgment proof’.
What does this mean? Being judgment proof means that a debtor is unlikely to ever pay up. Whether or not he actually has the means might be irrelevant. When willing debtors and attorneys work together, even debtors with legitimate means can be made judgment proof.
No Money, No Assets
This easiest way to understand being judgment proof is having no money and no assets. A judgment proof debtor has no means of paying what they owe. There aren’t any assets that can be seized and sold to satisfy the debt. Topping it all off is the grim reality that the debtor has no future prospects that would indicate being able to pay at some point down the road.
This type of debtor is considered judgment proof because there really is no way for the creditor to extract payment. It must be understood that there are debtors who are legitimately judgment proof and those who go out of their way to make themselves judgment proof after the fact.
It is hard to hold being judgment proof against someone who legitimately has no money and no assets. You can’t get blood from a stone, right? On the other hand, debtors who have the means to pay but choose to make themselves judgment proof are a major source of frustration for both judgment creditors and collection agencies.
How They Do It
Judgment Collectors, ajudgment collection agency based in Utah, says that your average judgment debtor is incapable of making them self judgment proof without the help of an attorney. There are exceptions to the rule. Some debtors know the system well enough to handle things themselves. But most need legal assistance to permanently avoid payment.
So how do they do it? It starts with employment. If a debtor is already working a low-paying job in a state where the ability to garnish wages is limited, they already have an advantage. Otherwise, they may quit their high-paying job and either remain unemployed or seek a low-paying job instead.
A debtor might also provide false employment and income information to the creditor’s attorney. After that, efforts to become judgment proof move to the next level. According to Judgment Collectors, attorneys often advise their clients to:
- hide or sell assets
- drain their bank accounts
- close safe deposit boxes
- liquidate securities
- declare bankruptcy.
Some of the strategies debtors employ to become judgment proof are not so easy to hide. Other strategies are. In most cases, an attorney’s help is invaluable. Attorneys know how to work the system to hide as much activity as possible.
A Cat-and-Mouse Game
When judgment debtors attempt to make themselves judgment proof, they are engaging in a cat-and-mouse game with creditors. And unfortunately, they often win that game. The vast majority of judgments entered in U.S. courts are never collected. Debtors making themselves judgment proof contributes to the problem.
Where creditors are concerned, they have three choices. They can keep trying to collect themselves, they can engage their own attorneys, or they can hire specialized judgment collection agencies. The third option is usually the best bet when debtors are trying to make themselves judgment proof. But even hiring a collection agency doesn’t offer any guarantees. Being judgment proof is a strong defense.