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UPDATE: What to Do If Your Debtor is Judgment Proof

Posted on in Debt Collection

What to Do If Your Debtor is Judgment Proof

Originally published: July 30, 2020 -- Updated: January 5, 2023

Update: When a debtor is judgment-proof, a creditor may have limited options for collecting debts. If a debtor's assets are exempt, they may not be seized and liquidated if the debtor files for bankruptcy. If a debtor's income is below a certain amount, it may not be possible to garnish the debtor's wages. However, creditors may have other options, including negotiating loan modifications with the debtor. This may be a good solution in situations where a debtor has secured debts and does not want to turn over the property they have used as collateral.

Loan modifications are agreements between the creditor and debtor that allow for changes to be made to the original terms of a loan. By negotiating these types of modifications, creditors can continue to receive ongoing payments from the debtor and minimize their financial losses, and debtors may be able to avoid the loss of property through repossession or foreclosure while ensuring that they will still be able to make affordable payments toward the debts they owe. 

Multiple types of loan modifications may be used, including a reduction of the interest rate on the loan, a restructuring of the repayment schedule, or an extension of the loan's term, all of which may lower the amount of a debtor's monthly payments. In some cases, payments may be temporarily deferred, or missed payments and related fees and penalties may be added to the principal of a loan, allowing these amounts to be paid off over time. By negotiating with debtors to find workable solutions, creditors can ensure that they will be able to recover as much of what is owed as possible while avoiding any further financial losses.

When considering whether to negotiate loan modifications with judgment-proof debtors, creditors must carefully evaluate their situation and consider all available options in order to make the best decision for their business. At Dimand Walinski Law Offices, P.C., our Illinois creditors' rights lawyers can provide guidance and legal representation in these situations. We can help creditors understand their options and ensure that they take the correct steps to deal with delinquent debtors. Contact us today at 312-704-0771 to arrange a consultation.




In most cases, receiving a court judgment against a debtor gives a creditor a clear path toward debt collection. The judgment allows you to seize assets and garnish wages until you have collected what is owed to you. However, a court may still stop your collection efforts if it determines that the debtor is “judgment proof.” Also known as “collection proof,” a judgment-proof debtor is someone who lacks the minimum income or non-exempt assets to collect from. This person could be without a job or meaningful assets and surviving on public benefits. What can you do if a debtor is judgment-proof?

Understanding What Judgment-Proof Means

Federal and state laws provide exemptions for debtors who are facing debt collection or have filed for bankruptcy. In Illinois, these exemptions include:

  • A homestead exemption for as much as $15,000 of equity in the home, or $30,000 if owned by a married couple
  • Wage protection if the debtor’s weekly income after taxes is less than 45 times the Illinois minimum wage
  • Protection for public assistance, retirement benefits, injury awards, and unemployment insurance
  • An exemption for one motor vehicle whose interest is not greater than $2,400
  • A $4,000 wild card exemption that can be used on its own or combined with other exemptions

A person is deemed to be judgment-proof when they have no income or assets available after these exemptions.

Keeping Track of the Debtor’s Financial Situation

A person’s status as judgment-proof is often temporary. It may be that the person lost their job or was unable to work due to injury or illness. Once their financial situation has improved, they may be able to move forward with debt collection as long as their debt judgment is still valid. Debt judgments in Illinois are enforceable for seven years. If your judgment has expired or is about to expire, you can file a petition to revive it in order to receive another seven years.

Contact an Illinois Debt Collection Lawyer

If you believe your debtor’s financial situation may make them judgment-proof, it may still be worth the effort to file a lawsuit against them. Some debtors in this situation do not bother to contest the lawsuit, allowing you to receive a default judgment. Having a debt judgment against the debtor will enable you to take immediate action when the debtor has income or assets that can be collected. A Chicago debt collection attorney at Dimand Walinski Law Offices, P.C., will advise you on your best options for dealing with debtors who are in default. Schedule a consultation by calling 312-704-0771.


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