I have done a lot of bankruptcy consultations for people who don’t really need to file. One of the most common reasons I advise some people to avoid bankruptcy is because they are judgment proof.
Being judgment proof means that you don’t have anything that creditors can take or attach. For example, I recently met with an elderly woman who only had about $900 in social security income and no significant assets. She was renting an apartment and was worried about one collection agency that was after her for a past credit card debt with Capital One. Capital One, through an attorney, obtained a judgment against her which scared her when she saw the paperwork. Having a judgment against you is an intimidating thing. But, for some people it has no real effect. A judgment allows a creditor to garnish wages, and/or attach non exempt property. But, social security income is fully exempt – meaning even if a creditor has a judgment they can not touch it.
In the case of the woman who came to see me there was absolutely nothing Capital One could do with their judgment. I told her to save her money rather than file bankruptcy because her income was safe and she had no assets that could be touched – ie; she was “judgment proof”.
You can still file for bankruptcy relief if you are judgment proof – and there may be some legitimate reasons to do so. A qualified bankruptcy attorney would be able to assess your overall situation and let you know the pros and cons of filing when you are judgment proof. If you believe you are judgment proof and the attorney never brings this up take that as a warning that he or she may be trying to sell you a bankruptcy that you may not need.
Our office talks to people about bankruptcy but we will always tell people if bankruptcy is not necessary or if there are other options. If you are judgment proof we will discuss whether bankruptcy should even be filed.
If you are facing overwhelming debt, feel free to contact us to schedule a free initial consultation. We would be happy to discuss what options you have to finally live debt free.