What Are Assets in a Judgment?

With many Americans struggling with debt as of 2011, judgments against debtors happen on a daily basis. When this happens, a judge gives an award to your creditors, who are able to use some of your assets to collect what you owe. However, creditors can't simply waltz into your home and take whatever they like --regulations specify what a creditor can try to seize.

Items Available as Assets

In the broadest scope, assets in a judgment may include anything you own. This is because creditors have the legal right to any item you use as collateral when you try to obtain credit.

Exemptions

Under most state laws, certain items are exempt from being considered an asset in a judgment. Usually this includes the same items that are exempted under bankruptcy. Items typically exempted include your homestead and furnishings, retirement funds, clothing, life insurance, vehicles and tools you use for work. Another common exemption includes Social Security. Notably, every state has different exemption laws, so you need to check with a debt attorney for your jurisdiction to find out what applies. There are limits on the dollar value to exemptions you file, which again vary by state.

Community Vs. Separate Property States

Most states are separate property states. This means that the government treats everyone as individual entities financially and makes everyone responsible for their own debt. In these states, creditors cannot seize the property of a spouse, unless the property is joint and the person who did not acquire the debt doesn't claim the percentage of the property in court. A few states are community property states, which means that couples are treated as one financial unit and that courts can hold each person responsible for the debt acquired by their spouses. If you live in a community property state and do not have enough assets to cover your debt in a judgment, creditors legally have the right to look to the assets your partner has.

Considerations

Sometimes the assets a judge would award a creditor do not have a value sufficient to pay off the entirety of your debt. In these cases, creditors often simply write off the debt you still owe, even if they're entitled to much of what you have. It depends on how much the creditor has to pay in legal fees when compared to the assets available. In addition, if you think that a creditor is going to take you to court, it is to your benefit to try to negotiate with the creditor. Creditors sometimes work with you to avoid the cost of suing. Lastly, keeping receipts for your property can prevent creditors and the courts from assessing property at a lower value -- this is important because a higher property value means an asset pays off more of your debt if it is seized.