Judgment Proof Letter: When It Stops Debt Collectors (and When It Doesn't)

A creditor wins a lawsuit against you. They now have a judgment. Normally, that judgment means they can garnish your paycheck, freeze your bank account, or seize your car. But if you're living on Social Security, have no property, and work minimum wage (if at all), they might not be able to touch you. You're what the law calls "judgment proof."

Sending a judgment proof letter tells the creditor exactly that: "You can sue me all you want. There's nothing to collect." If it's true, the letter can stop lawsuits before they start or halt collection efforts after a judgment. If it's not true, it's a waste of postage and might make things worse.

Here's when the letter works, what it must say, and what happens after you send it.

What "Judgment Proof" Actually Means

Being judgment proof does not mean the creditor can't sue you. They can. It does not mean they can't win. They probably will. What it means is this: even if they win, they cannot collect.

Under federal and state law, certain income and assets are exempt from collection. If everything you own falls into those categories, you're effectively uncollectible. The judgment sits on your credit report, but the creditor can't garnish wages you don't have or seize a car you don't own.

You're likely judgment proof if:

• Your only income is Social Security, SSI, or disability benefits
• You earn less than 30 times the federal minimum wage per week (about $217.50 as of 2025)
• You have no bank accounts with balances over your state's exemption limit (often $1,000 to $3,000)
• You own no real estate, no car worth more than your state's exemption (typically $2,000 to $6,000), and no other significant assets

If two or more of those apply, a judgment proof letter might make sense. If you're employed full-time, own a home, or have retirement accounts, skip the letter. You are not judgment proof, and saying so will backfire.

Why Send a Judgment Proof Letter

Debt collectors are businesses. They do math. If your file shows zero assets, exempt income, and no prospects of that changing, pursuing you costs more than it's worth. A judgment proof letter forces them to do that math early.

The letter works best in three situations:

Before a lawsuit is filed. If a collector is threatening to sue but hasn't filed yet, the letter might stop them. Litigation costs money. If your letter proves there's nothing to collect, they may write off the debt instead.

After you've been served. You still need to respond to the lawsuit (use our screener if you're considering bankruptcy as an alternative). But sending the letter alongside your Answer can convince the creditor to drop the case or agree to a nominal settlement.

After a judgment is entered. If the creditor already has a judgment and is attempting wage garnishment or bank levies, the letter can stop collection efforts. You may still need to file exemption claims with the court, but the letter puts them on notice that enforcement will fail.

What a Judgment Proof Letter Must Include

The letter is not a legal filing. It's a business communication. Keep it short, factual, and unemotional. Do not apologize. Do not explain why you're in debt. State the facts and cite the law.

Your letter should include:

• Your name and the account number so they know which file this applies to
• A statement that your income is legally exempt. Cite 15 U.S.C. § 1673 (federal wage garnishment limits) and your state's exemption statute if you know it.
• A list of your exempt assets. Example: "My only income is $1,100/month in Social Security disability. I own no real property, no motor vehicle, and no bank accounts with balances exceeding $300."
• A request to cease collection communications. Reference the Fair Debt Collection Practices Act (FDCPA) if you want them to stop calling, though this won't stop lawsuits.

Here's a template:

[Your Name]
[Your Address]
[City, State ZIP]

[Date]

[Creditor or Collection Agency Name]
[Address]

Re: Account #[XXXXXX]

To Whom It May Concern:

I am writing to inform you that I am judgment proof under federal and [your state] law. My only income is Social Security disability benefits in the amount of $[XXX] per month, which is exempt from garnishment under 42 U.S.C. § 407. I own no real property, no motor vehicle, and no other assets subject to levy or execution.

Because I have no collectible income or assets, any judgment obtained against me cannot be enforced. I request that you cease all collection efforts and close this account as uncollectible.

Under the Fair Debt Collection Practices Act, I further request that you cease all communication with me regarding this debt, except to confirm receipt of this letter or to notify me of specific actions such as filing a lawsuit.

Please acknowledge receipt of this letter in writing.

Sincerely,
[Your Signature]
[Your Printed Name]

Send the letter via certified mail with return receipt. You need proof they received it.

What Happens After You Send the Letter

One of three things:

They stop collection efforts. The file is marked uncollectible. You may still get letters or calls from other collectors if the debt is sold, but you can send the same letter to the new buyer.

They sue you anyway. Some creditors sue everyone, regardless of collectability. They're hoping you ignore the lawsuit and they win a default judgment. If that happens, you must respond. File an Answer (even if you admit the debt) and attach the judgment proof letter. The judge may dismiss the case or enter judgment with no enforcement.

Nothing changes. The collector ignores the letter and keeps calling. This is an FDCPA violation if you requested no contact. Document every call and consider filing a complaint with the Consumer Financial Protection Bureau (CFPB) or suing under the FDCPA. You can recover up to $1,000 in damages plus attorney fees.

Three Mistakes People Make

Lying about assets. If you claim you own nothing but you have a car, a bank account, or equity in a home, that's fraud. Creditors can subpoena your financial records. If they catch you, they will collect.

Sending the letter instead of responding to a lawsuit. If you've been served with a summons, the judgment proof letter is not a substitute for an Answer. You must file a response with the court or you lose by default. Send the letter to the creditor's attorney separately.

Assuming judgment proof status is permanent. If your financial situation improves—you get a job, inherit money, or buy a house,the creditor can resume collection efforts. Judgments last 10 to 20 years in most states. They do not expire just because you were once judgment proof.

When Bankruptcy Makes More Sense

If you're judgment proof because you're living on $1,200 a month in Social Security, a judgment proof letter might work. But if you're judgment proof today and expect that to change,maybe you're between jobs, or you're about to receive a settlement,bankruptcy may be the better move.

Chapter 7 bankruptcy wipes out most unsecured debts (credit cards, medical bills, personal loans) in about four months. If you qualify (your income is below your state's median), it costs around $300 to $400 in filing fees and can be done without an attorney using a service like ours.

Bankruptcy stops lawsuits, erases judgments, and gives you a clean start. A judgment proof letter just delays the inevitable. If you're buried in multiple debts and your income is only temporarily low, bankruptcy is the permanent solution.

Key Protections You Have (With or Without the Letter)

Whether you send a judgment proof letter or not, these protections apply:

• Social Security and SSI cannot be garnished by creditors (except for federal student loans, child support, or taxes). If a creditor freezes a bank account containing only Social Security funds, you can file an exemption claim and get the money back.
• Most states limit wage garnishment to 25% of disposable income. If you earn less than 30 times the federal minimum wage per week, no garnishment is allowed under federal law.
• Homestead exemptions protect equity in your primary residence. Amounts vary wildly: $25,000 in Alabama, unlimited in Florida and Texas. Check your state's statute.
• Retirement accounts (401(k), IRA) are generally protected under federal law, even outside bankruptcy.

These protections exist whether or not you send a letter. The letter just informs the creditor of what they'll find if they try to collect.

What If You're Not Quite Judgment Proof

Maybe you're close. You have a part-time job that pays $800 a month. You have $500 in a checking account. That's not enough to make collection worth the effort, but you're not technically judgment proof.

In that case, negotiate. Offer a lump-sum settlement for 20% to 40% of the balance. Collectors know that someone with minimal income is unlikely to pay in full. A small settlement now beats years of chasing nothing.

If they refuse, let them sue. Respond to the lawsuit, explain your financial situation to the judge, and propose a payment plan of $25 or $50 per month. Many judges will approve it. The creditor gets something, you avoid a judgment, and the case closes.

The Bottom Line

A judgment proof letter works when it's true. If your only income is Social Security, you own nothing worth seizing, and that's unlikely to change, the letter can stop collection efforts cold. If your situation is temporary or you're stretching the truth, it won't help and may hurt.

Before you send it, ask yourself: if the creditor pulls my bank statements and employment records, will they find what I'm claiming? If the answer is yes, send the letter. If the answer is "sort of," consider bankruptcy or settlement instead.