2020 Best Invention

What Does It Mean To Be Judgment Proof?

2 minute read Upsolve is a nonprofit tool that helps you file bankruptcy for free. Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card. Explore our free tool


In a Nutshell

Being judgment proof means that you do not have anything for a creditor to collect if they sue you and win. As you can imagine, this means that they are not likely to sue you. It does not mean that they can't sue you, just that they probably won't be able to collect if they do decide to take you to court.

Written by Jonathan Petts
Updated August 27, 2021


You're judgment proof if you don't have anything for a creditor to collect if they sue you and win. If this is the case, creditors are unlikely to go through the effort of suing you. But, this doesn't mean they can't sue you, just that they probably won't be able to collect if they do take you to court.

You are usually judgment proof when all of your income is exempt, you don't have any cash in the bank, you don't have any equity in real estate, and all your assets are exempt.

The 4 Factors of Being Judgment Proof

Income Exemptions 

Federal law limits how much of your wages and income a creditor can garnish. Wage garnishment is limited to the lesser of 25% of your take-home pay or the amount by which your income exceeds 30 times the federal minimum wage. This is currently $217.50 a week.

Creditors also can't take any income that you earn from the following sources regardless of the amount:

  • Social Security benefits

  • Supplemental Security Income benefits

  • Public assistance

  • Unemployment benefits

  • VA benefits

  • Child support

  • Federal employee and civil service retirement benefits

No Cash in the Bank

If you have money in cash or in a bank account that is from nonexempt sources (see list above of exemptions), a creditor that sues you may ask the court to freeze that money so that they can collect it. If you don't have any nonexempt cash or money in the bank, there is nothing for a creditor to freeze and seize.

Real Estate Equity

If you don't have any equity in real estate, you may be judgment proof. If do you do have equity in real estate like a home, creditors are allowed to place a lien on your real estate in order to ensure that they are paid. If they attach a lien to your property, you will have to pay it off before you can sell or refinance that property. If you do not have any real estate equity, there is nothing for a creditor to attach a lien to. 

Asset Exemptions

Each state (and the federal government) has a list of commonly owned items, or assets, that can be exempted from collection up to a certain dollar amount. If your assets are worth less than these amounts, the creditor will not be able to seize them if they win a judgment against you in court. 

Upsolve User Experiences

1,892+ Members Online
bryant graham
Bryant Graham
★★★★ 5 days ago
Upsolve was very helpful i highly recommend there service.
Read more Google reviews ⇾
Keith Vincent
Keith Vincent
★★★★★ 5 days ago
Upsolve provides a invaluable service at no cost. The clerk of court told me all of my paperwork was in order. It was done by myself with the assistance of Upsolve staff. Great Service for the people of this country. Thank you Upsolve.
Read more Google reviews ⇾
Andrew Morales
Andrew Morales
★★★★★ 6 days ago
Exceptional Service and Support - A Lifeline During Bankruptcy I am delighted to share my heartfelt gratitude for Upsolve and the exceptional assistance they provided my wife and me during our bankruptcy filing. Their expertise, kindness, and user-friendly platform made an otherwise daunting process remarkably simple and accessible. From the moment we engaged with Upsolve, their team exhibited an unwavering commitment to helping us navigate the complexities of bankruptcy with ease. Their knowledge and professionalism were evident at every step, and they went above and beyond to ensure we felt supported and understood throughout the entire journey. Upsolve's user-friendly platform was a game-changer, simplifying the otherwise overwhelming paperwork involved in bankruptcy filings. Their intuitive interface guided us through each necessary form, reducing confusion and streamlining the process. Thanks to their comprehensive resources and guidance, we were able to complete the filing accurately and efficiently. What truly set Upsolve apart was their empathetic and caring approach. The Upsolve team was always available to address our questions and concerns promptly, providing clear and compassionate explanations that put our minds at ease. Their commitment to accessibility is commendable, particularly for individuals like us who couldn't afford the services of a lawyer. Upsolve made bankruptcy filing a viable option for those facing financial hardships, providing much-needed support to those who need it most. While we have just completed the filing process and await the final outcome, we are confident that Upsolve's expertise and meticulous assistance will yield positive results. However, regardless of the outcome, we are eternally grateful for their invaluable help. They have given us hope and a fresh start, empowering us to take control of our financial future. If you find yourself in a similar situation, I wholeheartedly recommend Upsolve. Their commitment to making the bankruptcy process more accessible, their exceptional support, and their user-friendly platform make them an unparalleled resource for anyone in need. Thank you, Upsolve, for being our guiding light during this challenging time.
Read more Google reviews ⇾

Am I Judgment Proof?

If all of the above apply, then you are probably judgment proof. But it's important to remember that you may not always be. If a creditor garnishes your wages or gets a lien on your property while you are judgment proof, and if that garnishment or lien lasts until you are earning more or purchase property, that creditor can come after your assets at that future time. 

This is why filing bankruptcy when you are judgment proof can be so helpful. If you expect your financial situation to improve in the future, there's a chance that any creditors that couldn't come after you before will do so when you're no longer judgment proof. If you choose to file bankruptcy instead, the debts you have now will be forgiven and no one will be able to come after you for them regardless of how much you make or own in the future.

On the other hand, if you are judgment proof, have good credit that you need to keep, and don't expect your financial situation to change, filing bankruptcy may not be a good idea. Figuring out whether or not to file bankruptcy when you're judgment proof is highly personal. Be sure to take a good look at your assets, needs, and future plans before making a decision. 



Written By:

Jonathan Petts

LinkedIn

Jonathan Petts has over 10 years of experience in bankruptcy and is co-founder and CEO of Upsolve. Attorney Petts has an LLM in Bankruptcy from St. John's University, clerked for two federal bankruptcy judges, and worked at two top New York City law firms specializing in bankrupt... read more about Jonathan Petts

It's easy to get help

Choose one of the options below to get assistance with your bankruptcy:

Free Web App

Take our screener to see if Upsolve is right for you.

Take Screener
11,416 families have filed with Upsolve! ☆
or

Private Attorney

Get a free bankruptcy evaluation from an independent law firm.

Find Attorney

Learning Center

Research and understand your options with our articles and guides.

Go to Learning Center →

Already an Upsolve user?

Read Support Articles →

News

    + Show Articles
    Y-Combinator

    Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can't access their basic rights when they can't afford to pay for help. Combining direct services and advocacy, we're fighting this injustice.

    To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.