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Bankruptcy Attorney Said I’m Judgment Proof and Should Not Bother With Bankruptcy. – John

“Dear Steve,

I have $39,000 in credit card and unsecured loan debt due to becoming disabled with Parkinson’s in 2007. Unfortunately, I used credit lines to make ends meet, and now I am at the point of no return. Of the $39,000, $30,000 is to 2 companies (HSBC and Chase). One will not work with me to get interest rates and payments to where I can pay off all debts in 5 years.

I am on Social Security Disability. A local bankruptcy attorney states that I am “judgement proof” in the extent that if sued and a judgement is rendered, I have no attachable assets. He recommended that I not even bother with bankruptcy. Do you agree?


Dear John,

Actually, I would not be quite so quick to dismiss it. Here’s why.

I’m sure that you are being pursued for these debts. And if not by the original creditors, then by subsequent companies that may buy and trade the debt for years in hopes of collecting. This means that collection activity, calls and letters will continue indefinitely.

For some the constant confrontations with collectors can be stressful and depressing. And while you may be judgment proof that still does not mean that you can’t be sued along the way.

So for me it really all comes down to not if you are judgment proof but if you just want to close the door on these debts and never have to worry about them again since there is no expectation you will be able to dig yourself out of this mess. The best reason for bankruptcy simply might be for peace of mind and that’s not a casual reason to dismiss.

I can’t say I’m a big fan of paying one of the creditors for five years. While I agree in principle that people should honor their debts I think you have a greater responsibility to make sure you are using what money you have coming in or available to protect yourself for the future since you are disabled. I’d rather see you save $15,000 and use it in the future for your care than spend $15,000 and eat dog food latter. But that’s just me.

READ  I'm a Low Income Single Mother With a Disabled Son and Collectors are Chasing Me. - Milla

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • After reading this I thought it was very informative. I appreciate you taking the time to put this blog piece together. I once again find myself spending way to much time both reading and commenting. What ever, it was still worth it !

  • Just called the plaintiffs attorney asking if I could go in a monthly payment of my debt and avoid judgement being entered, I did not wanted to affect my credit any further … she said she would prefer judgement to protect her client (Hospital) I did send a hardship letter explaining my situation and the will to pay monthly but she refuse it because it was a “large sum” … $6,500.00 … I am seriously filling for bankruptcy … if I filled for it would my credit cards be taken away as well? … don’t own any debt on them but would like to keep at least one for emergencies … is that possible?

    State of Virginia

    Thank you

  • In 2007, I represented a woman who had recently been widowed and was surviving on Social Security. She had about $42,000 in debt, mostly in her husband’s name. Other than a $3000 car and the bank account where she received her Social Security direct deposit, she had no significant asset and certainly nothing that a judgment creditor could levy upon.

    I told her thank bankruptcy wasn’t necessary because her property was exempt from her creditor without bankruptcy. I told her that she could file for bankruptcy if she wanted peace of mind, but that I didn’t think it was necessary.

    She opted for the peace of mine. Judgment proof is the wrong term. Lack if assets does not prevent a creditor from litigating to a judgment. You never when someone might come into assets. You aren’t likely to win the Lotto, but a relatively might lave you money in their will.

    Judgment creditors and banks don’t necessarily know that all of the money in a bank is Social Security benefits. If a judgment creditor attempts to levy a bank account, the money may be tied up for a few weeks.

    Bankruptcy may not be necessary, but just be aware of the risks by not filing as well.
    .-= Carl H. Starrett II´s last blog ..Should Christians File for Bankruptcy? =-.

  • I was told what John was about being judgment proof. It came from a U.S. Trustee’s Office debt counselor. Then I got sued. I went to some consumer debt lawyers and this is what they told me, and is in fact the law here in NY and in most other U.S. You can be judgment proof and collection proof. But you can be sued and a judgment can be levied against you, even if nobody can collect on it. It goes on your credit report. It is not legal for an employer to openly discriminate against those who have a bankruptcy but they can and do discriminate more harshly and without reserve against people who have judgments against them. It goes for credit, jobs, renting anything, etc. Judgments seem to evoke that sleazy outlaw in the old pickup truck skedaddling across state lines. Judgments might come off a credit report in 7 or 10 years, but depending on your state, they are collectible for a lot longer than that. In NY, it’s 20 years to start with and they can get it renewed! Make sure you know your local laws and options before you decide. Bankruptcy is a last resort but sometimes it makes the most sense.

  • John,

    You may not be judgement proof, but may be collection proof. Your disability income is protected, provided it is the only source of income in your bank account. If it is co-mingled with other monetary assets it becomes a little riskier.

    Another thing to consider are what other assets you have. A judgement to collect a debt may afford garnishment of your bank account (which may be protected) or it could result in a lien placed on real or personal property.

    We have told people in situations similar to yours that they are collection proof and filing bankruptcy is probably not in their best interest considering the cost vs the benefit. But we also identify their assets to make sure.

    You need to protect yourself and make sure you can continue to live, as Steve said, put $15,000 away for yourself. Consider calling other local bankruptcy attorneys in your area and see if you end up with the same answers from a bankruptcy perspective, and make sure you disclose any assets that may be at risk.

    Best of Luck


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