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When is a person judgment proof

Asked over 3 years ago - Chicago, IL

My mother law ran up a bunch of credit card debt...she has no income except social security but he did own a house which we dedded to her daughter so that she would have a place to live and wnated to adress the debt paymen so we hired a debt consolidator.....so one of the credit cards companies hired an attorney form Alabama and if we do nothing we want to know if she is judgement proof..or what other actions can they take?

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Attorney answers (2)

Brett D Weiss

Reputation Level 14

Answered over 3 years ago. Bankruptcy Attorney in Greenbelt, MD.

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"Judgment Proof" simply means that the creditor is unlikely to be able to recover any money if it sues and gets a judgment. Typically, such people have no property, no significant assets, and no income other than social security (which is exempt).

The transfer of the house, if it made her insolvent, might be able to be reversed by the creditor as a fraudulent conveyance.

I recommend that your mother speak with a local bankruptcy attorney. He or she can review the situation and let her know what her options are.

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Lesley Abigail Hoenig

Reputation Level 14

Answered over 3 years ago. Bankruptcy Attorney in Mount Pleasant, MI.

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The first answerer is right that deeding the house to her daughter will possibly be considered a fraudulent conveyance. Whether this is the case, depends on how long ago it took place, and the state you are in. Some states the look back period is 5 years or longer. I would recommend not dealing with a debt consolidator (as it's very tough to find a legitimate one) and try to negotiate the debts directly, or hire an attorney to help you negotiate the debts (but then your mother in law would pay the debts directly), so as to ensure that settlements are actually reached with each creditor. If you consult an attorney, it would be wise to ask the attorney about what can happen to the house due to mother in law transferring it to daughter.

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