Understanding Debt and Collections: How to Determine If You Are Collection-Proof

If you do not have income or property that your creditor can take, that means you are a collection proof . This means that your creditor may not be able to collect anything from you right away.

If you are a collection proof debtor, a creditor may still sue you for the nonpayment of a debt owed. However, the creditor will be limited in their ability to collect on a court judgment against you.

A collection proof debtor has more protection against creditors and collection agencies. A person is considered a collection proof debtor if they meet the following requirements:

• They have no income, their take-home pay from work is below $495 a week, or their income is from a protected source like public benefits, child support, or social security;
• If they own real estate, the value of its equity is below $15,000;
• If they have a car, its value is less than $2,400; and
• The value of their personal property is not more than $4,000.

A collection proof debtor is only protected against personal, family, or household debt. Examples of this type of debt includes:

• Money owed from buying furniture or a car,
• Medical bills, or
• Credit card purchases.

Business debts are not covered. Other debts not covered include:

• Child support,
• Fines for parking or other code violations, or
• Damages owed as a result of a car accident or property damage.