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Judgment Proof or Just Cunning?

From Article of the Month — September, 2010


“Judgment Proof” refers to a debtor who has little or no assets for a creditor to seek payment of a judgment from. He/she is a debtor who has little or no property or income now or in the foreseeable future that a creditor can legally take to collect a judgment.

On the other hand, a cunning debtor is one who diverts his/her assets into holdings that can’t be reached by local courts, such as investing their money offshore through or transfers property or funds to others.

What assets are judgment proof?

First of all, a person who is very poor is judgment proof especially if he has no good outlook for employment. Bankruptcies will judgment proof some debtors as well.

Persons who are incarcerated are generally judgment proof because it is so difficult to enforce judgments against them.

Some non-standard incomes are often off-limits to creditors as well. These include:

  • Public assistance benefits;
  • Workers compensation;
  • Supplemental Security income;
  • State police pensions;
  • Life insurance or annuity proceeds; and,
  • Most retirement benefits.

Other incomes while available for child support or alimony are usually off-limits to other creditors. These include:

  • Social Security benefits;
  • Veterans benefits; and,
  • Unemployment insurance benefits.

In addition, someone who works part-time or barely makes enough to pay bills becomes judgment proof since creditors can only hope to garnish a percentage of disposable income — no disposable income means no garnishment.

Who are the “cunning” debtors?

Cunning debtors are either scoundrels or very smart; and there are different schools of thought on just which they are.

Scoundrels like default judgments as they don’t have to spend any money and no discovery on them can be done. It’s all too common for people or companies to hide any or all assets at the first hint of legal trouble. These assets can be hidden by transferring property to spouses, business partners, relatives or friends; or they can be moved to overseas accounts or changed into traveler’s checks. If the assets are moved because a judgment is in the works, then it is fraudulently or preferentially done.

Even though it may be possible to locate some of these assets, it can be expensive and perhaps not worth it. You have to look for transfers of money or property near the time of the judgment award; and even if you find such transfers, proving fraud in court may be difficult.


Again, winning your case is the easy part; trying to collect your judgment is something quite different. You must find out if the debtor is judgment proof. If they are, then be patient; they may get a job or come into some money later. Ultimately, you may be able to collect.

If you think you have a cunning scoundrel for a debtor, then try to find his/her assets. At the end of your 30 day waiting period after the award, you might consider setting up debtor’s interrogatories in court to hopefully find the assets before they disappear.

Just remember, don’t spend more than your judgment is worth to look for something that won’t even pay the bills for the search.

More articles and resources about judgment collection & enforcement, judgment law, and how to collect a legal judgement

We are available at any time to answer your questions regarding your possible claim, proceeding to court or mediation, judgement collection, judgment enforcement, and ways to collect your judgment. Contact us if you have questions or would like a recommendation for professional help in collecting your judgement.

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Tip of the Week

September 27, 2010

If you have been awarded a judgment, waited the 30 days required, sent a demand letter giving the debtor a time limit for paying his/her debt; what should you do if you still have no money? You know that the court can do little, but before you take steps to garnish wages or bank accounts, consider suggesting negotiation or mediation if the debtor gives any impression that they want to settle the matter.

More tips...

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