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Finance Tips: Debt & Being “Judgement Proof”

May 10, 2017

This week we have a special guest blog from Consolidated Credit. They have a team of amazing counsellors ready to help you manage your finances through your life events and avoiding the burden of debt.


Bankruptcy claims are being filed, jobs are tough to find, costs of living are rising and people are finding themselves stuck in debt with no hopes of paying it off. With large amounts of debt and no light at the end of the tunnel for repayment, filing bankruptcy claims make the most sense.

If you’re in a similar situation, you may have heard the term judgement proof. If you are judgement proof, a creditor may not be able to claim money owed by you as all your property is exempt under law. Does it sound like there’s hope now? Read more to find out about being judgement proof.

What does judgement proof mean?

Judgement proof refers to a protection for financially insolvent debtors against creditors from taking their protected property. In simple words, if you are judgement proof, your assets are exempt, so any debtor that is unable to pay money owed is protected from creditors taking their possessions. So judgement proof individuals don’t need to worry about losing any assets to debt collectors as they are fully exempt from collection.

When are you judgement proof?

Generally, you are judgement proof when:
• You are either not working or working at a low paying job
• Don’t have any assets such as property, money in your account etc.
• Your public entitlement benefits such as social security, unemployment benefits etc are exempt from collections

How does being judgement proof work?

When you owe creditors money and don’t make payments, they eventually sue you in court which results in a ‘judgement’. This is the official decision of the judge assigned to your case. The judgement allows the creditor to collect money owed in the form of wages, bank accounts, assets and more. In such a case, the place where the creditor would turn to next is your assets. In the case that you don’t own any assets such as property, real estate or anything of monetary value, you are considered to be judgement proof because your creditors will be unable to get anything from you to satisfy the judgement. Note that some assets or portions of assets are exempt whether you are judgement proof or not.

Which types of income are exempt?

A creditor cannot take any of your public entitlement benefits such as:
• Social security benefits
• Unemployment insurance
• Public assistance benefits
• Veteran’s benefits
• Federal employee and civil service retirement benefits
• Child support
• Social security disability insurance

Is your judgement proof status permanent?

Being judgement proof or collection proof is not permanent. You are collection proof only until your financial condition remains the same or worsens. Once your financial condition improves, you may no longer be judgement proof.

If I am judgement proof, can I ignore my debts?

While under the status of being judgement proof, creditors cannot collect anything from you but this will change once your financial situation changes. While being judgement proof, creditors have no legal way to collect a debt or enforce a court judgement against you, but you still do owe debt. While a court judgement may not be enforceable at that time, it is still possible to obtain a judgement against you. Remember that you are only judgement proof while your financial condition remains the same. Once your financial condition improves, creditors may be able to collect money from you in the future when you are no longer judgement proof.

What if I am disabled?

Many people supporting themselves with disability benefits struggle financially as the payments received are often times not enough. Having a disability as well as being in debt can be a difficult and highly stressful combination. You can also be assured that your social disability payments will remain untouched by creditors as they are exempt.
If your debts seem insurmountable, always remember that you do have options. You may want to consider a debt consolidation or learn more about your options by doing a debt analysis today or simply, call 1 (844) 737-5612 to deal with your debt right away.