When someone has a lot of debt, their credit rating is often also very bad. Some people in this tough situation might be able to deal with their loans and credit by doing nothing. This is where the term "judgement proof" comes in to explain what it means.
People who don't have much money or property and don't expect either to change have nothing to lose. They can't go to jail for not paying their bills, and both state and federal laws protect them and what they need for things like food, basic clothing, and even Social Security and disability benefits.
Basically, it doesn't make sense for a creditor to take them to court because even if the creditor wins and gets a judgement, they can't collect on it. This is what it means to be "judgement proof."
For these people, not paying off debt or fixing their credit doesn't seem to have a real effect on their money.
I said "appears" because this situation makes people feel so hopeless that they don't take the steps they need to take to make their lives and finances better. Those of you who are in this situation know what I mean. I worked in a neighbourhood with people in this situation for two years, and the violence that came out of their despair was like a dark cloud that covered the sun. It was there all the time.
If you're in this situation, I know it's hard to think straight, but wouldn't it make more sense to try to get out of it instead of thinking that you have nothing to lose so why bother?
The point is not what you don't have to lose, but what you can gain.
It's true that your creditors might not sue you if they don't think you'll ever be able to pay or if they think they can't get their money back. But what about you? Do you also believe you'll never be able to pay off a debt?
Like most things in life, debt is caused by missed opportunities. If you can't pay off your debt, it means you haven't yet found something valuable about yourself that you can use to make money.
Know Thyself is one of the best pieces of advice I can give to someone who is in debt and wants to fix their credit score. When you really understand this statement, it opens up more doors than you can imagine.
Call a debt counsellor or a credit repair expert, but also go to the library and pick up a book about yourself to help you figure out what's going on.
