Had to stop paying on several credit cards around January-February, and I also gave up my car in May.
I was managing my debt okay until I got sick and ended up in the hospital in February. Now, I’m not able to work much. I was already on disability, but now it’s tough to manage even a small amount of work.
I’m planning to file for bankruptcy, but that’s not cheap either.
Right now, I get $1,000 per month from alimony and sometimes do DoorDash when I feel up to it. Some months I don’t earn anything, and other months I make around $500-$600, but that’s before expenses.
I don’t own any property or assets. If it weren’t for the alimony, I’d probably qualify for SSI, which is even less.
From what I understand, this makes me ‘judgment proof,’ but should I tell my creditors that before they file lawsuits against me?
I owe about $3,000 on the car, and a couple of credit accounts are over $1,000, with the rest being less than that. No secured debts, no property.
Just wondering if giving creditors a heads-up is a good idea or if it might make things worse. I don’t know when I’ll have enough saved to file for bankruptcy. Got an eye surgery coming up, too, so it feels like things are just piling up. Any advice would be appreciated!
There’s no such thing as ‘judgment proof.’ Only a court can make that call. Telling a creditor that won’t slow them down. They can still take you to court, and the court will make the final decision.
Nope. They can still go after a judgment, and if they get one, they might be able to go after your bank account if you have one.
Just because they can’t garnish wages or place a lien doesn’t mean they won’t take legal action. It might even backfire if you start using words like ‘judgment proof.’
You could try asking for a hardship plan or small payments to show good faith and possibly keep things from escalating. It’s best not to provoke the lenders.
@Luca
I don’t have anything for them to take anyway, but wasn’t sure if it’s better to keep them updated or just stay quiet. I literally have no money to offer.
Jaden said: @Luca
I don’t have anything for them to take anyway, but wasn’t sure if it’s better to keep them updated or just stay quiet. I literally have no money to offer.
Well, you do have the $1,000 alimony each month, so there’s something they could take if they went that route.
If you have a bank account, they could try to get a court order to access it if there’s a judgment against you.
It might help to let them know about your situation, but just don’t say you’re ‘judgment proof.’
@Luca
That’s why I’m asking here. From what I read, alimony and SSI are supposed to be protected.
Problem is, I can’t even afford $5 a month to any of them. Bankruptcy is really my only option, but it’s a lot to save up for, especially with rent and everything else.
@Ev
I spoke with a couple of lawyers. I’d need to pay either upfront or in small chunks over a few months. It’s tough for me to save up anything for it, though. Might have to ask for help from family, but it’s a big ask.
Lawyer here (not your lawyer). You can tell creditors you’re judgment proof, but it won’t change much. For small debts, lenders might not pursue a lawsuit, but bigger ones often will. Once they have a judgment, they might attempt to garnish your bank account, so you’d need to be diligent in keeping exempt funds separate.
If you ever come into money down the line, like from a lottery win or new job, they might act on that judgment. For now, save up for a bankruptcy lawyer if you get sued.
It might not be that helpful. Most collectors know that ‘judgment proof’ is just temporary. The judgment lasts for about 10 years and can be renewed. So if your situation changes, they can come after you then.
Quill said:
Telling a creditor you’re ‘judgment proof’ is like saying to a cop ‘you got nothing on me.’ Usually doesn’t end well.
That’s not really how I meant it. I just wanted to figure out the best way to approach this situation. Heard from people that I was judgment proof, but I’m realizing that’s not the best approach.
I live in a 55+ community, and people talk about stuff like this, so I’m here to get real advice.
How many accounts do you have where $5 a month would be too much? Even paying a small amount monthly could help in the short term, just to show you’re trying.
Nevin said:
How many accounts do you have where $5 a month would be too much? Even paying a small amount monthly could help in the short term, just to show you’re trying.
I have several medical bills, maybe 6-8 credit accounts, and the car debt. Can you live on less than $1,500 a month? Some months I’m at $1,000.
I get food stamps, but not much. I’m sick and can end up in the hospital any time. I don’t have anything extra to offer.
I know I need to file bankruptcy but don’t have the funds for it. Trying to make it work until then, but it’s tough. Just trying to get by right now and save where I can.
Definitely stop using credit cards. You could call to see if they’d freeze your accounts so you can pay them down without added interest.
I had a judgment from 2011 that got refiled when they saw I was employed again, and that turned into garnishment. Judgments can hang around. Check your state’s laws on that.