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What does it mean to be ‘judgment proof?’

Judgment proof is a term commonly used by consumers and consumer attorneys when a consumer has defaulted on his or her debt(s) and does not have the income or assets to repay the debts.The term refers to the fact that if a consumer has no income or assets, there is nothing to collect against the judgment.

Unfortunately, judgments can still be obtained by creditors or debt collectors.  Being judgment proof does not protect you from a creditor or debt collector filing or obtaining a judgment against you, but there may be nothing for the creditor to collect on.

However, Social Security and disability benefits are generally exempt from garnishments. A court decision has set a precedent that debt collectors collecting on government education (student) loans can attach or garnish social security and/or disability benefits.

 

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