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What "Judgment Proof" Means

Exempt Property

This article tells you what happens if you can't make payments on a debt and what kind of income is protected from creditors.

You may be "judgment proof," but you still can owe money to a creditor. Learn what a creditor can and cannot take from you. You might have few assets, but there are still consequences if a court orders you to pay someone money.


If you owe a lot of debts and can’t pay them, you might have considered filing for bankruptcy. Before you do, you should find out if you are “judgment proof.” If you are judgment-proof, bankruptcy may not be the best solution to your debt problems. 

How do I know if I am judgment proof?

If you can’t pay on a debt, a creditor (person or company you owe) might sue you to collect it. However, you can't be put in jail for failing to pay your creditors (though child support is an exception). If you are sued and can’t pay, the creditor can get a judgment in court against you for the money you owe, plus interest. Being “judgment proof” means that your property and income can’t be seized by creditors, because it is “exempt” by law from the creditor’s claims. If your income and property is exempt, then you have nothing the creditors can take from you. 

You are judgment proof if:

You do not own anything of great value aside from exempt property like your homestead, a vehicle, household items and tools of your trade.

Your income is from a protected (exempt) source.

What kinds of income are safe from creditors?

The law protects certain kinds of income from the claims of creditors. If your income is from a protected source, it is exempt from claims of creditors. Examples of exempt income are:

  • Social Security or Social Security Disability Income
  • Veteran’s benefits
  • Public assistance (welfare) benefits
  • Retirement benefits
  • Worker’s Compensation and vocational rehabilitation benefits
  • Unemployment benefits
  • Court ordered child support and spousal support

Warning: Do not mix exempt income in a bank account with other money (for example, a spouse’s earnings), or it is no longer protected. Keep this money separate from any other income or earnings.

Can creditors take my wages?

Creditors can’t get your employer to take money from your paycheck unless it’s for court-ordered child support, IRS debts, and federally insured student loans. However, the money from your paycheck is not protected once it’s deposited in the bank. 

What property is safe from creditors?

Exempt property includes most of what you need to live:

  • Household items, up to $30,000 for a single person and $60,000 for a family.
  • Vehicles, one for each licensed driver in the house.
  • Your homestead, up to 10 acres urban property (single or family) and up to 100 acres rural (single) and 200 acres (family). NOTE: If you are behind on your mortgage, property taxes, or home equity payments, your homestead can be foreclosed. Don’t get a home equity loan to pay off credit card debts or medical bills -if you default on the equity loan, you could lose your home.
  • Other exempt property, including two firearms, tools of your trade, sporting equipment, bicycles, 2 horses, 12 head of cattle and other items.

Can I transfer my property to keep it safe?

Not when a lawsuit has been filed against you. You can be sued for hiding or fraudulently transferring property to avoid paying a debt. Also, real estate transactions are public records and are easy to trace.

Will I stay judgment proof?

A judgment creditor can renew the court’s judgment against you every 10 years. You are judgment proof as long as your financial condition stays the same or worsens. If your finances improve, your creditors might try to collect on the judgment.

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