Q. I was laid off from my job over two years ago and used my credit cards to pay my bills and groceries. I haven't been able to find a job since. . Last month I started collecting my social security to get by. The stress of worrying about my credit card bills is keeping me awake at night. What should I do?
A. To the individual in the question, the answer maybe to do nothing. Many individuals who worry about debts are, in fact, judgment proof. If someone is unemployed and owns only personal property such as household furnishings, a car with a low market value and a small amount of money in the bank they are probably judgment proof. Same applies if they are receiving social security and social security disability benefits.
Judgment proof means that even if a creditor sues you in court and obtains a judgment, the creditor will be unable to collect on the debt because your assets are exempt form seizure under state law. In Illinois the following personal property is exempt from attachment or judgment (which means no one can take the following property no matter how many lawsuits or judgments there are):
a. Your clothing, schoolbooks and family pictures;
b. Equity in a car up to $2,400.
c. Equity in professional books or tools of the trade (for example craftsman tools etc.)
d. $4,000 in equity in any other personal property.
e. $15,000 equity in your home.
This means that if someone obtained a judgment against you and you only had $2,000 in the bank, furniture with a value of $2,000 and a car with equity of $2,400 or less, your creditor would obtain nothing because the value of what you own is within the exemptions created by Illinois law. Your property is exempt and you are judgment proof.
Although a creditor may turn your debt over to a collection agency the agency will usually write off the debt if you are judgment proof. You will need to tell the collection agency of this fact and may need assistance from a lawyer who will so advise the collection agency. Taxes and secured debts (house mortgage or car loan) cause special problems which may lead to forfeiture of your property even if you are otherwise judgment proof. You may require the remedies that bankruptcy affords.