By: Robert J. Nahoum
If you are broke, out of work, on social security, disability or unemployment and you have no non-exempt assets then you are what is called â€œjudgment proofâ€.Â That means that there simply is nothing a debt collector can take from you â€“ you canâ€™t get blood from a stone.Â For this reason, many judgment proof consumers ignore debt collection letters and debt collection lawsuits resulting in a default judgment.
However, just because you were judgment proof at one time, does not mean you will always stay that way.Â The classic example is the judgment proof consumer who later comes into some money due to a court settlement from a slip-and-fall, car accident, medical malpractice or other personal injury.Â The debt collector may come after that court settlement. It makes no difference that you were judgment proof at the time the default judgment was obtained.
A debt collector with a New York state court judgment has a powerful tool at its deposal called a restraining notice.Â A restraining notice is a judgment enforcement device that restrains anyone holding property of the judgment debtor from releasing that property.Â The most common example of a restraining notice is where the judgment creditor serves a bank.Â If the bank is holding money belonging to the judgment debtor, the restraining notice precludes the bank from releasing those funds.Â Not only that, the bank is required to freeze double the amount of the judgment. Â For this reason, a restraining notice resulting in a frozen account can create an immediate and desperate need for the judgment debtor. Checks can bounce, rent can go unpaid and groceries might not be bought.
The reach of the restraining notice is not limited to banks.Â If you have a court settlement coming, the judgment creditor can serve the restraining notice on your attorney or whoever is charged with dispersing your settlement to you.Â If this happens, that person is legally precluded from paying you your settlement and may be ordered to hand the money over to the judgment creditor instead.
If you are judgment proof today but have any reason to think you might not be so in the future, you should think twice about defaulting on a debt collection lawsuit.Â This is particularly true given that in New York judgment collects interest at 9% per year.Â The decision might later prove to have been a very costly one.
If you need help settling or defending a debt collection lawsuit, stopping harassing debt collectors or suing a debt collector, contact us today to see what we can do for you.
The Law Offices of Robert J. Nahoum, P.C