Money & Debt

Sometimes. Even if you are collection-proof, you still need to go to court if you receive a citation to discover assets or a judge's order requiring you to appear in court. If you haven't received a citation to discover assets or other court order requiring your appearance, ignoring the lawsuit will likely result in a judgment being entered against you, but you can still decide not to respond.

If you're sued, you can send a Debt collector letter to let the creditor know you're collection-proof. Some creditors may drop the case if they learn you have no income or assets they can take. However, being collection-proof is not a legal defense that can stop a lawsuit. It just means your protected income and assets can’t be taken, even if the creditor wins and gets a judgment. 

Yes. Collection-proof status is based on your current income and assets. If your financial situation improves, creditors may be able to try collecting the debt again.

Retirement account funds, including IRAs, Roth IRAs, 401(k), and 403(b) accounts, are generally protected from collection in the event of debt from wrongful death or other liability judgments. Exceptions include judgment debt resulting from fraud or criminal activity. Funds withdrawn for essential expenses must not be mixed with any other money to remain protected.

Social Security payments generally are protected against consumer debt collection. However, the government can reduce Social Security payments to $750 monthly when benefits are garnished for federal debts or child support. To avoid complications, keep Social Security funds in a separate account.

The wildcard exemption allows you to protect $4,000 in funds or assets. This can be applied across several different items as long as the total protected under the exemption is no more than $4,000. You can assert the wildcard exception in each debt lawsuit where you want to use it by telling the judge what property you want to apply it to.