Having a judgment entered against you in civil court could mean the start of a long and arduous process to satisfy the creditor. That process may or may not include an attorney or a judgment collection agency contracted to extract payment from you. Should you choose to avoid payment, the attorney or judgment collector may choose to take some of your property.
State laws vary when it comes to the types of property that can be seized to satisfy judgments, at least according to Salt Lake City’s Judgment Collectors. What might be allowed in one state may be off-limits in another. As such, there is no way to compile a complete and detailed list. However, it is possible to put together a general list.
Assets That Can’t Be Taken
States have laws in place to protect debtors against unreasonable asset forfeiture. For example, most states do not allow judgment collectors to take money received as federal or state benefits. This includes Social Security payments, disability payments, and survivor’s benefits. Such benefits are considered necessary income that debtors need to sustain themselves.
Other assets that generally cannot be taken include:
- Unemployment Benefits – Because unemployment benefits are designated as replacement income, judgment collectors generally can’t seize monthly payments. Some states allow a portion of those payments to be taken depending on the type of judgment being collected.
- Worker’s Comp – Worker’s compensation payments are also replacement income. They generally cannot be taken by collectors.
- Maintenance or Child-Support Monies – Any monies designated by the debtor to go toward maintenance payments or child-support cannot be taken to satisfy other judgments.
- Primary Residences – With the exception of foreclosure judgments, collectors generally cannot take a debtor’s primary residence to satisfy a judgment. Some states provide exceptions for primary residences in which equity is in excess of a certain amount.
- Certain Vehicles – Some states restrict a creditor’s ability to take certain kinds of vehicles. For example, specially modified vehicles designed to serve disabled persons generally can’t be taken.
- Assets in Trust – Assets held in trust for another party generally can’t be taken either. This is because the trust assigns ownership of those assets to the eventual recipient.
It should be noted that there are exceptions to nearly all state rules limiting the assets that creditors can take. Many of those exceptions are related to particular types of judgments rather than the assets themselves.
Alimony and Child Support
From a legal standpoint, court-awarded alimony payments and child-support are both considered judgments. Should either one go unpaid, most states allow a for larger selection of assets for possible forfeiture. In some states, a deadbeat ex can lose his primary residence to cover back alimony and child support payments.
It should be no surprise that tax judgments are also an exception to most property seizure rules. If you owe either the federal or state government back taxes, either entity can take just about anything to satisfy your debt. That is why homes and businesses go into tax foreclosure. It is why the IRS and state taxing authorities have the legal right to seize a taxpayer’s bank account. Virtually nothing is off limits for tax judgments in these situations.
Should you ever find yourself facing a judgment, just know that there are certain types of assets that cannot be taken to satisfy it. Also note that you are better off just paying what you owe rather than having your assets taken. It is easier for everyone involved if you just set up a payment plan and make good on it.