Our New Jersey Debt Relief Lawyer Explains What it Means to Be Judgment Proof.
If you are deeply in debt, you may have concerns about the repercussions if creditors sue you and win a judgment for the debt. Typically, creditors could claim significant amounts through a wage execution or bank levy. However, there are instances where individuals are in such dire financial straits that creditors find it difficult to collect judgments. This situation is called "judgment proof," indicating that the debtor's financial position makes it virtually impossible for creditors to enforce the judgment through standard collection methods. As an experienced New Jersey debt relief lawyer, I understand the options for paying back a debt, even when funds are unavailable.
When There Are No Wages to Levy
In New Jersey, there are certain limitations on what creditors can and cannot do to collect. For example, with wage executions, they cannot attach:
- Social Security benefits
- Welfare benefits
- Unemployment benefits
- Veteran's benefits
- Child support
- Weekly income at or below the poverty level
If your income sources consist of only one or more, a creditor cannot attack them.
When There Are No Bank Accounts for Levy
Bank levies can only be brought against accounts in your name that contain your money. So if you have no accounts in your name, or there is one joint with your spouse or other family member, but you do not deposit any money into it (and you can prove that), creditors cannot take it.
There is also a defense that the creditor cannot seize bank accounts that contain solely money received from one of the above sources.
When There Is No Land to Levy or Liens
If you do not own real estate or own it jointly with a non-debtor spouse, then a levy against real estate would be impossible in the first instance or impractical in the second. This is because property held jointly by a married couple in New Jersey is done with an unbreakable right of survivorship.
This means that if the debtor's spouse dies before the non-debtor's spouse, the surviving spouse gets sole ownership of the property, even if a creditor had previously sold the debtor's spouse's interest. This makes selling that interest risky to the point of being unmarketable.
Being Judgment Proof Isn't Always the Answer
This is not to say that you should ignore debts if you find yourself to be judgment-proof. This is because, hopefully, things will change for you. What happens if you turn your life around because you find a job, are no longer disabled, or inherit money? What if you decide to buy a home?
Judgments in New Jersey can stay around for quite a while and can act as liens on real estate owned now or in the future for 20 years (with an option on another 20). You may be brought up short if you try to refinance your mortgage or sell your home.
Then what happens should you die? Do you want to be able to leave anything for your children? Even if your home doesn't have a mortgage, judgment liens can eat up an inheritance, and debts will have to be paid out of money in the bank. They could end up with nothing!
In most cases, being "judgment proof" is a temporary condition and should not be used to ignore creditors. If you need help dealing with your debt, download my free book, The Biggest Secrets Your Creditors Don't Want You to Know. Get the information you need to deal with your creditors. Are you a visual learner rather than a reader? Do you enjoy watching YouTube to learn new things? Then check out my 3-part video series on how creditors use lawsuits in New Jersey to collect debts. Just click here for more information on how to get the links!
What You Should Do
If you genuinely don't own anything, your credit score is terrible, and your debt is beyond repaying, this is probably the best time to file for bankruptcy. Better now than when your life turns around, you make more money and acquire more assets.
Need help deciding? Then you should download my free book, Am I In Too Deep? A Guide to Knowing When You Need to File Bankruptcy in New Jersey to find out if bankruptcy might be the solution. You can also take the quiz to the right if you need faster help!
If you live in southern New Jersey and are considering filing for bankruptcy, please call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
