Why Being Judgment-Proof May Not Last Forever
Winning a money judgment only to find out that the defendant is judgment-proof is deflating. You think you are in for a significant payday along with any vindication you might deserve. But then you suddenly realize that getting paid might be harder than you think. Before you give up all hope, know this: being judgment-proof may not last forever.
A debtor being judgment-proof means that person has limited or no income, limited or no cash assets, and no property with enough value to warrant judgment liens and writs of execution. Most judgment-proof debtors also do not have any reasonable prospects for the near future. But that’s not to say a debtor will forever be in a judgment-proof position.
Life changes are real. Just like you are going to experience them for as long as you live, a deadbeat debtor will also go through his own life changes. Some of those changes could ultimately result in a new found ability to pay what he owes.
A Promotion or a New Job
A judgment-proof debtor might get a promotion or find a new job altogether. Either way, it’s possible he will have sufficient income in the future to make garnishment a realistic option. Garnishing wages means taking a certain percentage of the debtor’s disposable income for payment on his debt. It is not the ideal way to get paid, but it does work.
Although time is generally a judgment creditor’s enemy, this is one case in which it actually works in a creditor’s favor. Let us say you delay all collection efforts because your debtor is judgment-proof. Five years from now, the debtor gets a new job with a significantly higher salary. There is a good chance he will have forgotten about his debt because you haven’t contacted him for so long.
Had he remembered, he might not have accepted the offer on the new job. But since he assumed you walked away and gave up on the debt, he now has income you can garnish.
People Inherit Things
Something else to consider is that a judgment debtor might eventually inherit cash or real property. Both can be leveraged to pay an outstanding money judgment. Again, time could be on your side as a creditor. A debtor could assume that you have given up all hope of collecting. Under such an assumption, he might not take any active steps to protect his inheritance. But now that he’s no longer judgment-proof, you can move forward.
Do Your Due Diligence
You don’t have to give up on a judgment because the debtor is judgment-proof at the current time. You may have options at some point down the road. However, there is one caveat: it is up to you to do your due diligence. You need to stay on top of things so that you can move forward should the opportunity become available.
Judgment Collectors, a Utah judgment collection agency based in Salt Lake City, says the first thing is to figure out the statute of limitations in your state. Most states recognize money judgments for 7-10 years. Most also allow renewal if necessary.
Also make a point of researching public records every 6-12 months to see if circumstances have changed. Again, you need to be ready to jump as soon as information indicates the debtor is no longer judgment-proof.
It is true that a judgment-proof debtor is hard to collect from. But being judgment-proof isn’t always a permanent condition. A simple change in circumstances could make your debt entirely collectible. So don’t give up. Stick with it until you either get paid or you are absolutely sure that payment is impossible.
