Most often, a creditor with a judgment against you won't take your personal property. While state laws vary, a significant percentage of your property is probably exempt. This means that your creditor has to go to the time and expense of taking certain legal steps, even after he has gotten a judgment against you, and the money he recovers might turn out to be negligible. A creditor does have the right to try, however, and some of your property is easier to get to than other items.
Household Items
To take your household items, such as furniture, computer equipment, entertainment equipment or jewelry, your creditor must first apply to the court for a writ of execution of the judgment he has against you. A process server, usually your county sheriff, will then come to your home and take an inventory of what property you have for potential sale. Depending on the law in your state, some of your property is probably exempt. For instance, in Ohio, approximately $1,000 worth of your household items and personal property are safe from seizure. In Virginia, $5,000 worth of household goods are exempt, as well as $1,000 of your clothing, and $10,000 worth of any equipment you need, such as a computer, for work or school.
Automobiles
Unless you own your car free and clear, there is no loan against it, and it is a newer model with significant equity, it is probably safe from a creditor with a judgment against you. More than $3,000 of your equity in your automobile is exempt in Ohio. In Virginia, it is $2,000. If you have a loan against your vehicle, the exempt amount is the difference between the loan value and what your car is worth.
Bank Accounts
Bank accounts and your wages are the most vulnerable to a creditor with a judgment against you. The creditor must also file a request with the court to levy your bank account or garnish your wages, but once he receives approval, he can deal directly with your bank or your employer. He can't take your entire pay check, however. He is restricted to a percentage, after taxes; the percentage varies by state law. Social security income, child support, disability income, workers' compensation and unemployment benefits are usually exempt.
Real Estate
If you own real estate, only rarely will a creditor force the sale of it to collect on your debt because the process is involved and expensive. However, he may place a lien against your property so you can't sell it without first satisfying the judgment against you. Alternately, you can sometimes make an agreement to satisfy the lien through the sale proceeds.
Tips
Unless you have significant assets that you own outright and income from employment, you may be "judgment proof." But this is not a legal concept; it simply means that trying to collect from you is probably more trouble than it's worth because after exemptions, there's not much, if anything, for the creditor to seize.
If a creditor does attempt to take your assets, check with an attorney in your state as soon as possible. If that property turns out to be exempt, you have a limited period of time to object to the court and either stop the seizure or reclaim the property.
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