Dealing with Debt Collectors: Judgment-Proof Debtors

It is another busy night at the clinic. Your client, Terry Turnip, arrives in a wheelchair. He shakes his head when the clinic assistant offers to give him a push, explaining, “I like to do what I can for myself.” When he’s situated at the table across from you, he pulls a battered manila envelope from the backpack in his lap. “I should have called for an appointment a long time ago. I didn’t, and now I got this.” He opens the envelope and shakes out a copy of a judgment. “What do I do now?”

In this ongoing series of posts, I am addressing issues related to debt collection that frequently arise at KCBA’s pro bono clinics. Other posts in the series will discuss Pre-Judgment Remedies, Time-Barred Debts, Unfair Debt Collection Practices, Charity Medical Care, and Student Loans. The clients and hypothetical scenarios appearing in my posts are, of course, fictional, and the facts are a bit more streamlined, and less messy, than they are likely to be in real life.

The Federal Fair Debt Collection Practices Act (16 U.S.C. 1692), and Washington state’s  Collection Agency Act (RCW 19.16.100) and Consumer Protection Act (RCW 19.86 et. seq.) provide the basic underlying legal framework for debt collection issues.  For a more comprehensive discussion of debt collection issues with pro bono clients, I recommend watching the KCBA Pro Bono Services training video, “An Overview of the Debt Collection Process.”

Terry is worried that his bank account will be garnished to pay the judgment. His only income is from SSDI, and he needs every cent to pay his rent, food, utilities, and medical expenses. “I barely get by as it is. My wife divorced me 15 years ago – she drove off in the car, and that was the last time I had a set of wheels that weren’t self-propelled. No kids. Lost my house after I got hurt and couldn’t work. It’s just me and my dog, Roper.”

Terry, like many clients who receive pro bono services, is “judgment-proof” – that is, he has no assets and his only income sources are exempt from garnishment. Income from many benefits programs, including SSI, SSDI, unemployment benefits, Temporary Assistance for Needy Families (TANF), worker’s compensation, and pension and retirement benefits, is exempt from garnishment for most debts. (Certain types of garnishment are exempt from these exemptions, such as when the garnishment is to collect delinquent taxes, child support, or student loan debt, but they do not apply to Terry’s situation, since the judgment against him is for a credit card debt.) The KCBA has a sample letter for judgment-proof clients to send creditors.

Terry is afraid that he’s going to lose what little he owns if the judgment creditor attempts to satisfy the judgment. You are able to reassure Terry that he is unlikely to be forced to give up his possessions, however, because other types of personal property are also exempt from garnishment, including equity in a home up to $125,000, a combined $5,000 equity in up to two motor vehicles (for a married couple), the greater of 35 times the current federal minimum wage or 75 percent of the client’s net wages, up to $200 in cash and $200 in a bank account (in addition to money otherwise exempt from garnishment), and up to $5,400 (for a married couple, $2,700 for a single person) in household goods, appliances, fuel and furniture.

Other Post-Judgment Resources

This post is for information purposes only and not for the purpose of providing legal advice. The author and KCBA make no claims, promises, or guarantees about the accuracy or completeness of the information posted to the blog.  Use of and access to the blog does not in any way form an attorney-client relationship between the post’s author, or KCBA, and the user.  Do not act upon any information contained in this post without seeking the advice of legal counsel licensed in your own state.


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