"Judgment proof" is "collection proof", that is, a judgment Creditor cannot collect funds or property by garnishment, sequestration or levy because the judgment debtor is protected by Federal & State exemptions from collection.
Writs of Garnishment, Sequestration or Levy
A Writ of Garnishment or Squestration attempts to collect from wages or compensation earned during the term of the Writ, typically running 30 to 180 days.
A Writ of Garnishment also may seek to take money or funds already existing, but in the hands of another entity, such as funds on deposit at a bank or credit union.
A Levy attempts to force the sale of property owned by the Judgment debtor .
If the wages, funds or property are fully protected by exemptions, the judgment debtor, upon claiming the exemptions, is protected from the collection, and therefore "judgment proof."
"Judgment Proof" does not apply to secured loans: the Creditor may proceed to repossess or foreclose upon the collateral.