In a legal context, being “judgment proof” means that a defendant cannot be held legally liable for a money judgment because the defendant does not have any assets that could be seized to satisfy (pay off) the judgment amount. This means that, if a plaintiff successfully obtains a money judgment against a defendant, the plaintiff may still be unable to recoup the judgment amount.
Modern Examples of Judgment-Proof Situations
The concept of being judgment proof is especially relevant in today’s society. For instance, individuals who have excessive debt are often judgment proof because they lack the assets to satisfy the judgment. Similarly, individuals who are living on a fixed income, such as Social Security benefits, are not likely to be able to satisfy a judgment and, thus, may be viewed as judgment proof. Additionally, certain businesses may be judgment proof because their assets are not owned by the company, but instead are owned collectively by multiple owners who each have limited liability.
The Bottom Line: What Does It Mean to be Judgment Proof?
Being judgment proof is a situation where a defendant cannot be held legally liable for a money judgment because they lack the assets to satisfy the judgment. This concept is particularly relevant in times where individuals are living on a fixed income or businesses lack the ownership structure to satisfy a judgment.