Should you fail to pay your bills, your creditors can legally sue you for the money you allegedly owe them, but if you are ‘judgment proof’, they may not succeed in collecting it, especially if it is a credit card balance, medical debt arrears, or some other form of unsecured debt. In this blog, we’ll explain what this all means and how it can affect a bankruptcy filing.

Judgment proof defined

Legally speaking, a debtor is judgment proof when everything they own is exempt from seizure under state law. Getting a judgment against you for that $5,000 credit card bill is of little use to a creditor when all they can take to satisfy a debt is non-exempt assets, and you have none. You don’t even have to be completely destitute to be practically immune from creditor actions: certain types of income are protected from collection lawsuits. They include:

  • Social Security benefits
  • Disability benefits
  • Unemployment benefits
  • Certain types of retirement income

You are also safe from wage garnishment under federal law if you earn no more 30 times the federal minimum wage per week. In 2017, this amounts to $217.50.

Should you still file for bankruptcy?

While you are presently immune from creditor collections, this may not always be the case. In New York, the statute of limitations is six years from the date you defaulted on an obligation such as a credit card or medical bill. Some creditors will wait until the statute of limitations is on the verge of ending, and then suing simply to get a judgment to keep the option to collect open.

Judgments give your creditors the right to collect your debt for ten years. They can even seek to get a judgment renewed, keeping you in their sights and subject to collection actions for a long time to come. If your fortunes improve in the form of a high-paying job or windfall (e.g., lottery winnings or inheritance), then your creditors can move in and garnish your wages or seize your new wealth.

In a situation like this, filing for bankruptcy can protect your financial future. All collection actions are stopped by the automatic stay, your important assets are protected and if you fulfill the conditions of your filing, then all unsecured debts are eliminated. Your creditors will have no claim over any future earnings.

If you’ve been sued by creditors but are presently protected by your judgment proof status, then meeting with a New York bankruptcy attorney can help you decide on the best course of action. They will review your circumstances with you, and make recommendations based on your goals and current situation. Jayson Lutzky is a Bronx lawyer who handles bankruptcy cases. If you are behind on your bills and in debt, then bankruptcy may be a good option for you. To learn more and for legal advice, set up a free consultation with Mr. Lutzky. His office is one block from the 183rd Street stop of the 4 train. Call 718-514-6619 or visit