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Judgment Proof and Bankruptcy

There are some individuals that because of their income and assets may not need to file for bankruptcy. Bankruptcy is a tool that can help individuals with income and assets, avoid creditor seizure and garnishment. When an individual has minimal assets and no income they may be judgment proof and may not need to file for bankruptcy.Judgment Proof

What Does it Mean To Be Judgment Proof?

A person who is judgment proof is a person who does not have any attachable assets or income from which a creditor would be able to collect from. Although the creditor can still try to call you or obtain a judgment to collect the debt, the reality is that they will not be able to collect the money because of the income and assets you own. Even though a creditor may have a judgment against you he will not be able to seize your income, bank account assets or other property to satisfy the judgment. An example of a judgment proof person is generally a person whose only source of income is Social Security and whose only assets are their households goods and clothing. A regular creditor is prevented from garnishing social security income. In this situation, even if the creditor obtained a judgment they would not be able to garnish the Social Security income or to levy a bank account that contained only Social Security money.

Should You File for Bankruptcy If You Are Judgment Proof?

The answer depends on your particular circumstances and if you expect that there will be changes in your income and assets. Although you may be judgment proof at this time, if you are expecting to obtain employment in the near future then you may want to file to avoid any future garnishment of income. In addition if you are expecting to obtain any type of asset or to purchase a home then filing for bankruptcy can help protect any future asset ownership from your current creditors. Even if you are judgment proof you may want to consider filing for bankruptcy simply for the peace of mind. Although creditors may not be able to collect from you, they can still call you or file lawsuits against you. The stress and anguish caused by creditor calls can play havoc on your mental and physical health. Filing for bankruptcy can ensure that you do not have any future contact with these creditors.

Consult with a local bankruptcy attorney to determine whether you are judgment proof and whether bankruptcy is necessary give your particular circumstances.


Larry if the cosigner files for bankruptcy it does not mean that your assets will be liquidated since you did not file for bankruptcy. What it can affect is the asset that the person cosigned for if it is a secured debt. If you fail to make the payments on the secured debt then of course the creditor may try to repossess or foreclose on the property. Second you may receive a note on your credit report for that particular debt indicating that it was included in a bankruptcy. If the asset that was cosigned for has equity and that equity is not protected in the bankruptcy then there may be an issue with it being liquidated.
If someone consigns for you and the cosigner files bankruptcy how does that effect the person they consigned for? Can the property be liquidated?

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