Well, most of the time, the answer is quite a bit. However, there are some people that are so badly off financially that creditors really cannot get any traction against them to collect. This is what is called being "judgment proof."
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, or
- weekly income at or below the poverty level
If your income sources consist of only one or more of these, then a creditor cannot attack it.
No Bank Accounts to Levy
Bank levies can only be brought against accounts in your name that contain money of yours. 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 bank accounts that contain solely money received from one of the above sources that it cannot be seized by the creditor.
No Land to Levy or Lien
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 so with an unbreakable right of survivorship.
This means that if the debtor spouse dies before the non-debtor spouse, the surviving spouse gets sole ownership of the property, even if the debtor spouse's interest had been previously sold by a creditor. This makes a sale of that interest risky to the point of being unmarketable.
Being Judgment Proof Isn't 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 awhile, 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 to your children? Even if your home doesn't have a mortgage, judgment liens can eat up an inheritance, and debts would have to be paid out of money in the bank! They could end up with nothing!
Being "judgment proof" is, in most cases, a temporary condition and should not be used to ignore creditors. If you need help dealing with your debt, then 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!
So What Should I Do?
If you truly don't own anything, your credit score is bad, and your debt is beyond repaying, then this is probably the best time to file 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.
If you live in southern New Jersey and are considering filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.