Filing for bankruptcy protection requires time, effort, and some investment. If it can be avoided, many Americans would rather do so. Could you avoid filing bankruptcy because you are 'judgment proof'? And should you? The answer may surprise you. 

What Is Being Judgment Proof? 

The idea of being judgment-proof simply means that you have no income or assets which a creditor could seize to pay a debt. Even with a court judgment on their side, there is no way to collect that money. 

There is no legal determination that a person or organization is judgment-proof. Each person must make that decision for themselves. 

Will You Still Be Sued?

Even if a person has nothing which could be seized by creditors, they can still be sued by those creditors. The creditor is motivated to try whatever they can to collect. They are unlikely to simply believe that you have nothing they can access. 

Creditors are also not prohibited from continuing to make your life difficult in order to collect. This often includes unlawful methods like bothering you at work or harassing family members. The stress — even knowing you can't be garnished — can be challenging. 

Could You Be Wrong?

The biggest risk to considering yourself as judgment proof is that you will be wrong. The law in this area can be very complicated, and many Americans are not fully versed in its intricacies. 

For instance, it is true that a person who only receives Social Security income is generally protected against seizure of that income. However, do you deposit Social Security funds into a bank account with any other income sources? If so, money can be seized in accordance with that other income, which creates a serious issue you must hope to sort out. 

Why Is Bankruptcy Smarter?

The best way to deal with debts you can't reasonably pay is to seek permanent, legal protection from them. Bankruptcy is designed to provide this, and it's your right to seek it. 

Bankruptcy halts all collections efforts, including lawsuits and harassment. Ignoring the debt cannot accomplish this. When you receive a discharge, those debts cannot come back to haunt you years later. And the court is behind you if anyone violates your rights during or after bankruptcy.

If you truly are judgment-proof, you may also find that you lose little or nothing to Chapter 7 bankruptcy liquidation. And debts that are discharged may cause no additional tax issues if you are insolvent at the time. 

Where Can You Learn More?

Rather than hoping you really are judgment-proof, meet with a bankruptcy lawyer to learn the facts. No matter what route you take to managing old debts, they will help you make it as successful as possible. Call today to make an appointment.