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When to Send a Judgment Proof Letter

George Simons | September 03, 2024

George Simons
Co-Founder of SoloSuit
George Simons, JD/MBA

George Simons is the co-founder and CEO of SoloSuit. He has helped Americans protect over $1 billion from predatory debt lawsuits. George graduated from BYU Law school in 2020 with a JD-MBA. In his spare time, George likes to cook, because he likes to eat.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Fact-checked by Patrick Austin, J.D.

Patrick Austin
Attorney from George Mason
Patrick Austin, JD

Patrick Austin is a licensed attorney with a background in data privacy and information security law. Patrick received his law degree at George Mason University's Antonin Scalia Law School, where he served as the Editor-in-Chief for the National Security Law Journal.

Summary: If you are unemployed, have no assets or savings, and are being hounded by debt collectors, it may make sense to send a judgment proof letter to your creditors informing them of your situation. If you are deemed to be judgment proof, it may result in your creditors opting not to pursue litigation in the hopes of recovering on your outstanding debts.

If you are being pursued by debt collectors, or a debt collection lawsuit has been filed against you, then it may make sense to send a judgment proof letter. The viability of such a letter will depend on your financial situation. For example, a judgment proof letter generally only makes sense if you have no property to seize, little-to-no wages to garnish, and no savings. If you meet this standard, you can send a judgment proof letter to creditors or collection agencies to try and halt further litigation.

If you send a judgment proof letter, make sure to use registered mail with a return receipt so you have proof of delivery.

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What does judgment proof mean?

In effect, being deemed judgment proof means that creditors will not be able to garnish your income because it is protected and you have no assets. Being judgment proof does not protect you from a judgment, though it typically means the creditor cannot collect on the amount owed, or in other words, enforce the judgment.

When a creditor wins a debt collection lawsuit, they will have a formal judgment against you. Creditors can use that judgment to seize assets and garnish your wages. However, if you are considered judgment proof, it may stop the creditor in their tracks and restrict them from collecting any funds or assets.

What should a judgment proof letter look like?

If you are contemplating sending a judgment proof letter to your creditors, then you may be wondering how the letter should be drafted and structured. This is understandable since there are various legal forms and filings, each with their own unique formats.

Your judgment proof letter should include the following:

  • A statement asserting your rights under
  • An explanation that your income is exempt from wage garnishment
  • An explanation that none of your assets are collectible
  • A request that the collector cease communications with you

To help in the judgment proof letter drafting process, here is a sample judgment proof letter:

Sample Judgment Proof Letter SoloSuit

These are the key factors for being deemed judgment proof

There are specific factors that are relevant in assessing whether someone is considered to be judgment proof (i.e., shielded from judgment collection). Those factors include:

Your income is exempt from wage garnishment

Federal law limits how much of your wages and income can be garnished by a creditor. For example, wage garnishment is limited to the lesser of 25 percent of your take-home pay or the amount by which your income exceeds 30 times the federal minimum wage (currently $217.50 a week).

In addition, a judgment creditor cannot take any income that you earn from the following sources, regardless of the amount:

  • Social Security check
  • Unemployment benefits
  • Child support
  • Supplemental Security Income benefits
  • Public assistance
  • Veterans benefits
  • Federal employee and civil service retirement benefits

You have no money in the bank

If you have no money in cash in the bank, it means there is nothing for a judgment creditor to try and freeze and seize.

You own no real estate assets

If you do not have any equity in real estate, then you may be considered judgment proof. Lacking equity in real estate such as a home means that a collection agency will be unable to place a lien on the property.

The assets you do owe are exempt from collection

There is a list of commonly owned items (i.e., assets), that can be exempted from debt collection up to a certain dollar amount following a court judgment. Such lists vary state-by-state. The federal government also has such a list. If your assets are worth less than the relevant exempt amounts, creditors will be unable to seize them if they secure a court judgment against you in court in a debt collection lawsuit.

Do not use being judgment proof as a defense in your debt collection lawsuit

Being deemed judgment proof can provide a semblance of legal protection, but it is important to understand that such protection is temporary. Even if you are considered to be judgment proof, you will still need to respond to all of your outstanding debts. In addition, if your financial situation improves down the road (e.g., you get a new job, inherit money from a relative, etc.), then creditors and debt collectors may attempt to continue to pursue the amount owed.

Remember, being deemed judgment proof simply places a temporary hold on a debt collector being able to pursue your income. A judgment entered in a debt collection lawsuit does not go away or disappear. Furthermore, a money judgment is generally valid and legally enforceable for up to 20 years.

The temporary nature of the judgment proof status and the amount of time a judgment can be enforced is why it makes more sense to raise other potential defenses to a debt collection lawsuit.

For example, you may be able to defend yourself by asking for debt verification. If the creditor or collection agency is unable to provide proof of the original debt, then the collection case may be tossed out. Another opportunity for defense is that of the statute of limitations. If the applicable statute of limitations to collect the debt has expired, then it is possible to raise this as a defense and have the lawsuit dismissed.

In the video below, attorney John Skiba explains that it is very to rare to truly be considered judgment proof:

What if I'm not judgment proof?

If you're being sued by a debt collector, and you're not judgment proof, be sure to respond. To do so, you must file an Answer with the court and send a copy to the plaintiff. To learn more, check out our guide on How to Answer a Summons for Debt Collection.

Answer a Summons for Debt.

Draft and file an Answer to your debt collection lawsuit to prevent a default judgment.

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In Summation

If you are deemed judgment proof (also commonly referred to as “collection proof”), then iit means you lack sufficient income and assets to pay off a debt, or debts. Individuals are generally considered judgment proof when they are unemployed or working a low-wage job, in addition to lacking actual assets such as savings or real estate that could be seized in the event of a collection judgment.

If you send a judgment proof letter to your creditors, the letter should contain the following elements:

  • A detailed explanation as to why you are judgment proof
  • Your full legal name and address
  • Your account number

Once you send the letter to your creditors, there is a possibility they will opt not to pursue litigation since there is not a realistic chance to collect on the amount owed. However, it is important to understand that being deemed judgment proof is usually a temporary status and creditors may continue to call and monitor you to assess whether your status changes.

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