A question often asked is why creditors insist on suing to collect unpaid debt even when the debtor has no assets to satisfy the resulting judgment. I can think of at least two reasons.
First, a judgment is good for 20 years in New York. That means that the creditor, or “judgment creditor” once a judgment has been entered, has 20 years from the entry of the judgment to collect (or “execute”) on the judgment. Who knows what might happen in a span of time that long? It’s entirely possible that the judgment debtor (the debtor after a judgment has been entered) may begin to assemble valuable assets through higher earnings power, significant gifts, an inheritance, the receipt of life insurance, or a judgment in favor of the judgment debtor. Creditors can afford to think long-term and just because you are presently collection-proof does not mean that you always will be.
Second, you may not have assets, but you are likely to have a job (or in the future will get a job) that pays you wages that can be garnished periodically by the judgment creditor. This collection process is called “income execution” in New York. Again, creditors can take the long view and can afford to be patient as they collect methodically and periodically through garnishment.
In short, just because you don’t have any assets now does not mean creditors will go away. You can make creditors go away by filing and successfully administering a bankruptcy case.
If you would like to discuss how bankruptcy might work for you fill out the form below, hit “Submit” and I will send you a free copy of my article “What Are the Advantages and Disadvantages of Filing for Bankruptcy Protection under Chapter 7 of the Bankruptcy Code?”
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