Judgment Proof - Definition
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Judgment Proof Definition
Judgement proof is a term used for a person who is unable to meet the requirements to pay a creditor by a court order or whose assets and income are insufficient to meet a debt obligation if they are seized. A debtor that is bankrupt, insolvent, unemployed or seriously impoverished is a judgement proof. Also, a debtor whose assets or properties are protected by the laws of a state is judgement proof, this is because there are certain properties or income that cannot be seized despite a court order. An individual that is judgement proof is also collection, this however does not mean that the creditor cannot obtain repayment forever.
A Little More on What is Judgment Proof
Judgment proof can be better understood with the illustration below; due to overwhelming expenses while on sick leave, Mr Bright accumulates debt using his credit card, after he recovers, he is unable to repay the debt. A court judgement is obtained against him demanding that all debt be repaid. However, Mr Bright is no longer employed and is therefore judgement proof because there is no means to pay back. He has no savings, he has no assets to repay the loan. If by the following year, Mr Bright gets a well paying job, the financial agency can begin to collect the money owed by garnishing a part of his salary. Peradventure the judgement expires before he secured the job, the judgement can be renewed.