My potential client owed about $30,000 on his credit cards with a few medical bills thrown in. He had not made any payments on any of these bills in the last couple of years. One of the credit card companies had already sued him, and there was another lawsuit pending.My potential client owned no real estate and rented an apartment. He also had an older vehicle that still had payments left on a loan.
He had clothes and household items, but not much else. He did not have a job and was collecting Social Security. After subtracting his typical household and vehicle expenses from his check, there wasn’t anything left to pay on the charge cards and old medical bills.
In other words, he was judgment proof.
What Does it Mean to be Judgement Proof?
First, no one I know is truly judgment proof. Entities can sue you if you owe them money, and they can get judgments. The term judgment proof is another way of saying that if someone receives a judgment against them, the entity that obtains the judgment can’t really do anything with it to harm the person.
That is true with this potential client. With no real estate, no encumbrance-free vehicles, and virtually nothing in the way of property, the entity that has obtained the judgment cannot get anything. Often they can go after someone’s bank account but, since the only money going into this account is a Social Security check, it is protected.
Is Bankruptcy Still Right for You?
Bankruptcy is designed to protect your assets, so why should you bother filing if there is nothing to collect? Here are some very good reasons.
1. The phone calls, letters, and lawsuits stop.
This means a lot to some people. Harassment is not pleasant.
2. You work on getting your credit restored.
As long as you keep missing payments, and there are open accounts or judgments in your credit report, you will have a difficult time repairing your credit score. You might need it to move to another location, or purchase a car with a reasonable interest rate.
3. You will get peace of mind.
Owing money bothers many people and it can cause a great deal of anxiety. By filing bankruptcy and starting with a clean financial slate, they can put that part of their life behind them.
Let’s talk about your options.
If you want to look at your options, give us a call at Steidl and Steinberg. The consultation is free, and we will give you our best judgment as to what you might do... even if you are judgment proof.