Judgment Proof

August 12, 2023


No two words are more discouraging to a judgment owner. Most people know the usual reason debtors do not repay judgments (being clever or poor), but there are other reasons.

Related to being poor is bankruptcy – even if the debtor is rich. If the debtor files for bankruptcy protection, you cannot enforce a judgment against them, unless you first get written notice that you can from the court where the debtor filed for bankruptcy protection.

Frauds: Let’s say you sue Phillip Fry, but that was only one of the many names he used. He has used more than 20 names, burning people then changing names. This makes it very hard to collect.

Another kind of fraud is the clever fraud that takes your money, hides it, then lives (as it appears to the outside world) as a poor person. Many frauds keep no assets in their name. Some keep their cash in a hidden safe. Some use other people’s social security numbers or more than one. Many frauds have planned ahead long ago before cheating you.

Police/Government officials/Powerful people: I know people who will not even attempt to enforce a judgment against a police officer, a mayor, an IRS worker, etc.

Friends/family of small town court clerks: Sometimes people who know debtors break laws and rules to help them. This may be hard to believe, but I have witnessed this.

Last year, I mailed documents to a Texas court in a small town. They never mailed them back. I called them, and they say they never received them. I repeated this twice more, then one time more with certified mail. The same results, they could not find any of my paperwork.

I called many times, and one time a different person answered the phone and I found out the reason they kept losing my paperwork. The person who told me was the other of the two clerks at that court house.

The head clerk was a good friend of the judgment debtor. She had a history of tossing anything related to that debtor into the shredder. The other clerk said the head clerk runs the office as she sees fit, and to not call again. I gave up, what an outrage, but what can one do?

Illegals: If someone is here illegally, and does not have a valid social security number – they will not have a bank account, and most likely will be working for small amounts of cash – hidden from enforcement efforts.

Vagabonds: There are people that rip people off, then move to another town or State, and move so often, that creditors are always one step behind them.

Movers: On small judgments (e.g.,less than $1,000) it is usually not cost effective to domesticate a judgment to another State. Even a big judgment is rarely cost effective to enforce if a debtor moves overseas.

Jail: When a debtor is in jail, generally it is hard to enforce a judgment against them.

Veterans: Sometimes, veterans get breaks on judgments and debts, e.g., a six percent cap on interest rates, and the reopening of default judgments.

Non-standard sources of income: These kinds of income are usually off-limits to all creditors: public assistance benefits, workers compensation, Supplemental Security Income (SSI), State police pensions, life insurance or most annuity proceeds, and most retirement benefits.

These income sources are available for child support or alimony payments, but are usually off-limits to other creditors: social security benefits, unemployment insurance benefits, and veterans benefits. Most child support judgments never expire.

Too poor: This is the most popular reason to be judgment-proof. Sometimes poor people come into money, then a judgment enforcer may appear to pounce on their assets.

Judgment Proof is not always permanent. What every judgment owner should wish for is their debtor to make a lot of money, and get (and stay) lucky.

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