Most unsecured creditors, like credit card lenders, must obtain a judgment against you before they can attach assets in satisfaction of past-due debts. They do this by suing you for what you owe. Often, there are valid defenses to the debt or an opportunity to settle the debt for less than you owe. Unfortunately, most people fail to respond to the collection lawsuit. As a result, the court enters a judgment, which is the court’s determination that you owe what the creditor says you do.
The phrase “judgment proof” refers to a person who has no assets or income that can be taken to satisfy a judgment against them. However, technically speaking, there is no such thing as “judgment proof.” You can always be sued and a judgment will be obtained against you if you lose. What the term “judgment proof” really means is that you don’t have any assets or income that the creditor can take. If your creditors are aware that you are judgment proof, they may be less likely to pursue a judgment against you. However, you should bear in mind that being judgment proof doesn’t necessarily mean you have nothing to lose if a creditor sues you. For example, the judgment will typically have a negative impact on your credit.
The basics of what it means to be judgment proof are explored below, however, if you are concerned about being sued by a creditor, or you want to know whether a creditor can collect on a judgment against you, you should consult with an experienced bankruptcy attorney.
How Do I Know if I am Judgment Proof?
A person is only judgment proof if there are absolutely no avenues available for a creditor to collect a debt. For example, California exemption laws protect a significant amount of equity in your home. In 2021, the minimum homestead exemption was increased from $75,000 to $300,000. That number is periodically adjusted for inflation. In 2025, the minimum protection for equity in a California home is $361,113. Depending on median home values, you may be able to protect up to $722,151 in equity.
If all of the equity in your home is exempt, your home is safe. However, an Abstract of Judgment can be recorded that acts as a lien against your home and accrues interest for the time it goes unpaid.
There are many other forms of property that your creditors can take besides your home. However there are also many other exemptions that protect essential property. For example, California law protects up to $8,625 in equity in a motor vehicle. So, if your car is worth less than $8,625, there’s no value for the creditor to seize. If you have two cars and the combined equity is less than $8,625, they’re both safe. (Note that equity and value are not the same. If your car is worth $20,000 but you still owe $15,000 on your auto loan, your equity is $5,000.)
Even if you have no hard assets that a creditor can take, they may be able to come after you in other ways, such as wage garnishment.
What is Wage Garnishment?
Many people believe that creditors can only come after their property, such as their home or car to collect a debt. This is simply not true. Wage garnishment occurs when a creditor receives a court order saying that your employer is required to take money directly out of your paycheck and send it to your creditors. Therefore, if you are employed, you may not be judgment proof even if you own no assets.
If you have an income, not all of your wages can be taken through wage garnishment and wage garnishment is not available in all states. In most cases, both federal law and California law protect 75% of your wages. That means most creditors can’t take more than 25%. There are some exceptions, such as child support. If your income is very low, even more may be protected–or you may not have garnishable income at all.
Moreover, only your disposable earnings can be withheld. Disposable earnings are what you have left over after mandatory deductions (like taxes) are taken out of your paycheck. 15 USC § 1672.
Additionally, there are some forms of income that cannot be garnished. If your only income is from one of these sources, you may still qualify as judgment proof. For example, most creditors cannot garnish Social Security retirement benefits or Social Security disability benefits. An experienced Los Angeles debt resolution attorney can tell you whether your income is garnishable and to what extent.
California Wage Garnishment Laws
Here’s a bit more detail about California’s wage garnishment laws:
-
The first party to achieve a garnishment order has priority if you have more than one wage garnishment order against you.
-
The maximum that can be garnished from your paycheck is 25% of disposable earnings, or the amount by which your weekly disposable earnings exceed 40 times the minimum wage — whichever is less.
-
As much as 65% of your disposable earnings can be deducted if you owe money to support a child.
-
If you owe taxes to the state of California, they can garnish up to 25% of disposable earnings.
-
You can object to a wage garnishment on the basis of hardship under California law.
Can I Still be Sued If I am Judgment Proof?
You can still be sued even if you are judgment proof. Your creditors may sue you, and obtain a judgment against you in the hopes that they can come after your property if and when you become solvent again. Most civil judgments stay in effect for 10 years. In many instances a judgment can be renewed for 10 years, and there is no limit on the number of times the creditor can renew a judgment. So, even if you were once unable to pay, your creditors may seek to enforce the judgment as soon as you can pay. And some judgments, such as judgments for child support, never expire.
However, as of January 1, 2023, there are new limits on renewal of certain types of judgments against individuals. If the debt is for medical costs and is less then $200,000, it can only be renewed once and only for five years. The same limits apply to any personal debt less than $50,000, as long as it doesn’t stem from a tort or fraud and isn’t a debt to an employee.
Here at Borowitz & Clark, we can help. We have experienced bankruptcy attorneys who can review your case for free, no obligation. Stop the stress caused by debt collectors. Contact us today.