When someone is unable to pay a legal judgment due to little or no assets, they are considered proof of judgment. Creditors cannot collect the debt until the debtor’s situation changes. Creditors can still take legal action, and may monitor the debtor for signs of a change in their situation. Creditors can seek repayment through other means, such as suing a cosigner or another entity. It is not recommended to ignore creditor inquiries.
When a legal judgment is made against someone and that person is unable to pay it due to little or no assets, that person is considered proof of judgment. As long as that person’s situation remains the same, it will be impossible for creditors to collect the debt. However, as soon as there is a change in the debtor’s situation, the creditors can take action. There are a number of circumstances that can lead someone to be considered a trial judgement.
Being proof of judgment is not a defense; creditors can take someone to court even if he has a slim chance of being able to pay a judgment. Likewise, someone can bring a civil suit against someone who would be unlikely to be able to pay a judgment. Instead, it is determined after a judgment has been made that the obligee is unable to pay it. Creditors may have income and assets that are considered protected because they are minimal, or the income may be protected by wage laws. Benefits from social service agencies, for example, are protected income and cannot be taken by creditors.
When creditors win a judgment and are unable to collect it, they are unlikely to drop the lawsuit. They will monitor the debtor for signs that the debtor’s situation is changing in order to seize any wages or assets acquired. For example, if someone is held judgment-proof due to unemployment and that person gets a job, the creditor may be able to garnish that person’s wages until the judgment has been collected.
Creditors can also seek repayment of the judgment by other means. A cosigner to a loan, for example, would have to pay off the loan if the original signer was proof-of-judgment and no collections could be made. Someone involved in a civil suit could see if another person or entity could be held liable and develop a second lawsuit to garner judgment. For example, if someone is involved in a traffic accident and the other driver is judgment-proof, that person could sue the Department of Public Works claiming that the road was unsafe and this contributed to the accident.
Sometimes people are encouraged to respond to creditor inquiries with claims that are evidence of judgment, or to ignore inquiries if they believe they are evidence of judgment. This is not recommended. Creditors may certainly be made aware of difficult financial circumstances which make collection of a judgment unlikely, but they may still choose to sue the debtor; it is only after the trial that the court will rule that the obligee is proof of the judgment.
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