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Collection Proof or Judgment Proof – MYTH BUSTED!


Today, we’re going to do some myth-busting about what it means to be collection proof or judgment proof. Hi, my name’s Mike Ziegler. I’m the managing attorney for the Debt Fighters. We’re a Florida law firm committed to help consumers eliminate serious debt. A very common situation that I run into with folks that I talk to is what the importance is or what the role is of being judgment proof or collection proof.

So first, what does it mean to be either judgment proof or collection proof? Very often this term is used for someone who has income that may be partially or fully protected. So by way of example, someone who is a social security recipient or receives disability income or VA disability income, generally, those are going to be protected forms of income under Florida and often federal law. Likewise, someone who qualifies for Florida’s head of family protection may at least so long as that protection is in place have protections over their income.

When a creditor obtains a judgment, they’re going to seek different ways of trying to recover the money from that judgment. One of those methods is to garnish the income or the bank accounts of the judgment that are for the defendant in the lawsuit. Now, when that happens, the judgment debtor often ask themselves what is that they can actually collect upon. And if I have a protective form of income, can they collect upon that form of income? So the answer is mostly yes, but that doesn’t mean that the process is easy on the defendant or the judgment debtor.

The way that a protection or one of these exemptions that we talked about works is that usually the creditor will first impose garnishment. They will seek to collect upon the bank account of the defendant that will result in freezing the bank account. After the bank account is frozen, then the judgment debtor can file a claim of exemption form to ask the court to unfreeze the bank account.

Now, while the claim of exemption process is considered an expedited process in the court system, that doesn’t mean that it’s an overnight process. Generally, it takes the court several weeks at least to consider a claim of exemption. That can put the judgment debtor, the defendant in a difficult position because that may mean that there is several weeks or even upwards of a month that they can’t use that bank account. Particularly for people that are on fixed incomes, that may be quite a difficult month because that may be a month of bounced checks, a month where they don’t have access to the resources to put food on the table and so forth.

So in short, being collection proof or judgment proof is a reactive process, and while it will ultimately protect your assets if you undertake the appropriate process to claim the exemption, that doesn’t mean that it won’t create an imposition for the person who is being sued or being collected upon.

So what can you do proactively to address these things if you don’t have this issue to begin with? First, it can in some instances be beneficial to inform the plaintiff or the judgment creditor that your income does come from a protected source, and if they’re doing their job correctly, then they shouldn’t attempt garnishment if they’re aware that all of your income is from a protected source.

The second option would be to look for a method to resolve the debt. So even if you are judgment proof, there can be value in resolving the debt either through settlement or bankruptcy or other alternatives so that you don’t have to worry about a garnishment coming at a time that you’re unprepared. If you have questions, if you want to evaluate your options, I encourage you to contact my office for complimentary consultation. We support for the consumers in resolving their debt challenges.

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