Judgment Proof

No two words are more discouraging to a judgment owner. Most people know the usual reason (being very poor), but there are other reasons.

Related to being poor is bankruptcy - even if the debtor is rich. If the debtor files for bankruptcy, you cannot enforce a judgment against them, unless you first get written notice that you can from the court where the debtor filed.

Frauds: Let's say you sue Phillip Fry, but that was only one of the many names he used. He has used more than 20 names, burning people then changing names. This makes it very hard to collect.

Another kind of fraud takes your money, hides it, then lives (as appears to the outside world) as a poor person. Many frauds keep no assets in their name. Some use other people's social security numbers or more than one. Many frauds have planned ahead long ago before cheating you.

Police/Government officials/Powerful people: I know people who will not even attempt to enforce a judgment against a police officer, a mayor, an IRS worker, etc.

Friends/family of small town court clerks: Sometimes people who know debtors break laws and rules to help them. This may be hard to believe, but I have witnessed this.

Last year, I mailed documents to a Texas court in a small town. They never mailed them back. I called them, and they say they never received them. I repeated twice more, then one time more with certified mail. The same results, they could not find any of my paperwork.

I called many times, and one time a different person answered the phone and I found out the reason. The person who told me was the other of the two clerks at that court house.

The head clerk was a good friend of the judgment debtor. She had a history of tossing anything related to that debtor into the shredder. The other clerk said the head clerk runs the office as she sees fit, and to not call again. I gave up, what an outrage, but what can one do?

Illegals: If someone is here illegally, and does not have a valid social security number - they won't have a bank account and most likely will be working for small amounts of cash - hidden from enforcement efforts.

Vagabonds: There are people that rip people off, then move to another town or State, and move so often, that creditors are always one step behind them.

Movers: On small judgments (e.g.,less than $1,000) it's usually not cost effective to domesticate a judgment to another State. Even a big judgment is rarely cost effective to enforce if a debtor moves overseas.

Jail: When a debtor is in jail, generally it's hard to enforce a judgment against them.

Veterans: Sometimes, veterans get breaks on judgments and debts, e.g., a six percent cap on interest rates, and reopening of default judgments.

Non-standard sources of income: These kinds of income are usually off-limits to all creditors: public assistance benefits, workers compensation, Supplemental Security Income (SSI), State police pensions, life insurance or annuity proceeds, and most retirement benefits.

These income sources are available for child support or alimony payments, but are usually off-limits to other creditors: social security benefits, unemployment insurance benefits, and veterans benefits.

Poor: This is the most popular reason to be judgment-proof. Sometimes poor people come into money, then a judgment enforcer may appear to pounce on their assets.

Judgment Proof is not always permanent. What every judgment owner should wish for is their debtor to make a lot of money, and get (and stay) lucky.

Who Can Collect My Judgment?

I am not a lawyer - I am a judgment broker. With that out of the way, a judgment is a legal document that needs proper "care and feeding". If the debtor named goes bankrupt, or the time limits have expired (e.g., ten years in California, five years in Wyoming), or there is a successful court action to cancel it, the judgment can die. Also, if all laws are not followed during the enforcement of your judgment, you may end up owing the debtor money.

Anyone that enforces a judgment must take care of it. This article is for judgment owners considering who should enforce their judgment. Here are the five choices, with the pros and cons of each:

1) You can enforce your judgment yourself. The pro parts are that you are in full control of everything, and that this is usually the cheapest way to enforce a judgment. The con parts are that judgment enforcement requires a lot of time and money. Be polite, use common sense, and have patience. Each state has its own laws on what you can and cannot do to enforce a judgment.

2) Hire a lawyer on contingency - the pro parts are that it may not cost much to get your judgment enforced. The con parts are that very few judgments are accepted on contingency by lawyers. Also, the lawyer may give up if the judgment is not easy to enforce, wasting a lot of time. Also, many lawyers who take a case on a contingency expects the Judgment Creditor to pay all court costs up-front before taking your case. Court costs can become expensive.

3) Hire a lawyer by the hour - the pro parts are that when your judgment is large and you already know where the debtor's assets are, you can save a lot of money. The con parts are that usually things are not so easy, and often you end up spending a lot of money with no recovery on the judgment.

4) Use a collection agency - the pro parts are that collection agencies can sometimes persuade certain debtors to pay, by writing letters to them, calling them, and putting the judgment on their credit report. The con parts are that collection agencies don't take every judgment they see, require you to establish an account with them, and can't take money or property from a debtor.

5) Use a Judgment Enforcer, or a Judgment Broker - the pro parts are that they are more likely to take your judgment, and more likely to recover money from the debtor. They look for and grab assets. The con parts are that they must take ownership of your judgment, you cannot control how they work, and most charge 50% of what they recover from the debtor.