I've seen in quite a few posts over this week people asking what "judgement proof" means and thought we might want to discuss it as a separate post.
If you are Judgement proof (doesn't mean you can't get sued, means there is no way of collecting on the suit) you should explore how likely you are to become "not Judgement proof" before the Statute of Limitations for Collection (SOLC) expires. If you are not likely to become Not Judgement proof before SOLC expires (say you are a Stay at Home Mom for the next 15 years) then settlement is a possibility, whether the SOLC has expired or not. THIS SHOULD BE APPROACHED VERY CAREFULLY IN COMMUNITY PROPERTY STATES. Only treat non-community debt as outside SOLC. Community debt should still be treated as within SOLC. See my post "Making Yourself Judgement Proof" (No, I can't find that post.)
Are You Judgment Proof?
Alternatives to Bankruptcy
Learn what you can do instead of filing for Chapter 7 or Chapter 13 bankruptcy.
In many situations, filing for bankruptcy is the best remedy for debt problems. In others, however, another course of action makes more sense. This article outlines your main alternatives.
Do Nothing
Surprisingly, the best approach for some people deeply in debt is to take no action at all. If you're living simply, with little income and property, and look forward to a similar life in the future, you may be what's known as "judgment proof." This means that anyone who sues you and obtains a court judgment won't be able to collect from you simply because you don't have anything they can legally take. (As a famous song of the 1970s said, "freedom's just another word for nothing left to lose.")
Except in unusual situations (being a tax protester or willfully failing to pay child support) you can't be thrown in jail for not paying your debts. Nor can a creditor take away such essentials as basic clothing, ordinary household furnishings, personal effects, food, or Social Security, unemployment, or public assistance benefits.
Will filing for bankruptcy ruin my chances for a student loan?
So, if you don't anticipate having a steady income or property a creditor could grab, bankruptcy is probably not necessary. Your creditors probably won't sue you, because it's unlikely they could collect the judgment. Instead, they'll simply write off your debt and treat it as a deductible business loss for income tax purposes. In several years, the debt will become legally uncollectible. And in seven years, the debt will come off your credit record.
Rest of article at:
If you are Judgement proof (doesn't mean you can't get sued, means there is no way of collecting on the suit) you should explore how likely you are to become "not Judgement proof" before the Statute of Limitations for Collection (SOLC) expires. If you are not likely to become Not Judgement proof before SOLC expires (say you are a Stay at Home Mom for the next 15 years) then settlement is a possibility, whether the SOLC has expired or not. THIS SHOULD BE APPROACHED VERY CAREFULLY IN COMMUNITY PROPERTY STATES. Only treat non-community debt as outside SOLC. Community debt should still be treated as within SOLC. See my post "Making Yourself Judgement Proof" (No, I can't find that post.)
Are You Judgment Proof?
Alternatives to Bankruptcy
Learn what you can do instead of filing for Chapter 7 or Chapter 13 bankruptcy.
In many situations, filing for bankruptcy is the best remedy for debt problems. In others, however, another course of action makes more sense. This article outlines your main alternatives.
Do Nothing
Surprisingly, the best approach for some people deeply in debt is to take no action at all. If you're living simply, with little income and property, and look forward to a similar life in the future, you may be what's known as "judgment proof." This means that anyone who sues you and obtains a court judgment won't be able to collect from you simply because you don't have anything they can legally take. (As a famous song of the 1970s said, "freedom's just another word for nothing left to lose.")
Except in unusual situations (being a tax protester or willfully failing to pay child support) you can't be thrown in jail for not paying your debts. Nor can a creditor take away such essentials as basic clothing, ordinary household furnishings, personal effects, food, or Social Security, unemployment, or public assistance benefits.
Will filing for bankruptcy ruin my chances for a student loan?
So, if you don't anticipate having a steady income or property a creditor could grab, bankruptcy is probably not necessary. Your creditors probably won't sue you, because it's unlikely they could collect the judgment. Instead, they'll simply write off your debt and treat it as a deductible business loss for income tax purposes. In several years, the debt will become legally uncollectible. And in seven years, the debt will come off your credit record.
Rest of article at:
Not homestead exemption for that!
Comment