Many people who receive a notice of a pending lawsuit for defaulted credit card may have heard that the opposing party can’t win because they are “judgment proof”. This question comes up all of the time – “I’m being sued but I’m judgment proof – do I need to do anything?” The answer is definitely YES!

The majority of lawsuits filed against consumers for defaulted credit card debt comes from collection agencies. This debt is purchased from credit card companies or as large bundles of debt from other junk debt buyers. Very little information about the debt or the consumer is attached to individual debts.

Due to this lack of information, there is very little knowledge (if any) whether or not the consumer has any money – and most of the time the collection agency doesn’t care. In a dAt the trial, do you think the the judge says “Oh, they don’t have money – case dismissed”? Nope. Judges rule based on the law (or at least that’s the theory). I can guarantee there is no law that dictates that a case be dismissal or granted based on a defendant’s income.

Post judgment, there will be a hearing about what assets you have. If you are a hardship case, you may be able to avoid having your wages garnished or assets seized after a judgment is granted by getting an exemption.

At this hearing, your assets are reviewed. There are federal and state laws regarding garnishments, and what is exempt from garnishments. If you have assets eligible for garnishment, the judge will enter a writ of garnishment against you, and your creditors can apply to your employer or bank to get payment.

If you can’t pay, the judge will not issue a court order garnishing wages or seizing bank accounts and may issue an exemption. Here are some examples of what is exempt:

• Social Security benefits
• SSI benefits
• Welfare benefits
• Veterans benefits
• Workers and unemployment compensation
• Life, accident and health insurance proceeds
• Some pensions

If you are exempt – you may not have to pay the money awarded to the plaintiff, but you’re still going to be paying a penalty – a very large blemish on your credit report. In addition, judgments are usually good for 10 years or more. If the plaintiff learns at a later date that you currently have garnishable assets, they may reapply for – and get – a writ of garnishment.

At the bare minimum, you should always respond to a summons/complaint. If you don’t respond, you automatically lose the suit. It’s really not that difficult to answer a suit, and at least initially, does not require a lawyer. We’ve written an article called “I’ve Been Sued” that you should read to at least understand the process.

I don’t want people to think they don’t have to do anything because they’re “judgment proof”. Nothing could be further from the truth.

Have you been exempted from a garnishment? Successfully defended yourself in court? Tell us about it by leaving a comment!

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