As we’ve discussed in prior entries, if you don’t pay a bill, you may be sued by a creditor, who may obtain a judgment against you. However, there are limitations on what a judgment can do. There are certain things that the law says cannot be touched by a creditor as a matter of law. If you do not have anything that a creditor can legally touch, you are what lawyers call “judgment proof.” When lawyers refer to someone as “judgment proof” it means that even if the creditor obtains a judgment against you, it has no practical way to enforce it.

For example, with very rare exceptions, Social Security cannot be garnished. If your only source of income is Social Security, and you have no car, house, or other tangible assets, congratulations, you are judgment proof. Creditors can sue you until the end of time and there is nothing for them to take.

However, just because you are judgment proof now, does not mean you will always be that way. For instance, government unemployment is generally not subject to garnishment. So if you are on unemployment, and have no other assets, you are probably judgment proof. However, you will probably go back to work eventually, and your creditor will then be able to go after you. It’s important to realize that if you have hit a rough patch, your situation will probably turn around eventually, and you should take steps now to make sure that your are in a position to recover when things do turn around.