Personal bankruptcy is a good example of salvation that comes with a price. It can enable you to keep things that you might otherwise lose to foreclosure or repossession, like your home and your car. It can help you to get back on your feet financially by discharging debts. It can bring you peace of mind by stopping creditor lawsuits against you and ending collection agency attempts to relentlessly pursue you.
Yet despite its intended use as a means of last resort for those in financial trouble, bankruptcy is still used unnecessarily by some people. Sometimes an individual's financial and asset situation is such that there can be other ways to get out from under heavy debt burdens without the need to use bankruptcy. One such group of people are those who are referred to as, "judgment proof."
What this means is that if you have little or nothing in the way of assets that a creditor can pursue, then even if the creditor uses legal mechanisms to collect against you it will not do any good. If, for example, you have no car, no savings accounts, no house and no job, then even if the creditor takes you to court and wins there will be little if anything for the creditor to collect from. There is no need to seek bankruptcy protection in such a scenario, because you have nothing to protect from creditors.
Being judgment proof is not always the same as being destitute. People and even businesses can become judgment proof by not having assets that can be reached through a legal judgment because they are outside of the jurisdiction of the court, or are otherwise legally unavailable to satisfy a judgment.
This is not to say that being judgment proof is free of its own costs. You will have a public record of a judgment against you. If you acquire money or assets later, the judgment creditor may be able to come after those. Or the creditor may go after someone else that you care about to try to collect.
No matter whether you are considering bankruptcy or think that you may be judgment proof, it is a good idea to consult with financial and legal advisors to help you to make sure that the option you choose is the right one for you, and one that you have carefully chosen.