Suing someone with no money can absolutely be worth it, but the reasons are usually not what people expect. In most cases you are not really collecting from the person at all — you are collecting from an insurance policy, or you are securing a judgment that stays enforceable, with interest, for years while the person’s finances change. The decision turns on whether insurance covers the claim, how much the lawsuit will cost you, and whether the debtor’s situation is likely to improve before your legal right to collect runs out.
What “No Money” Really Means in Court
Someone is “judgment proof” when they have no income or property a court can legally force them to hand over. Every state shields certain assets from creditors so people can keep a basic standard of living after losing a lawsuit. Protected categories include a portion of home equity under a homestead exemption, a primary vehicle up to a set value, tools of the trade, and retirement accounts. Employer-sponsored plans like 401(k)s get unlimited federal protection under ERISA, and IRAs are protected in bankruptcy up to $1,711,975 for the 2025–2028 period.
Social Security is the strictest of the protections. Federal law flatly prohibits creditors from seizing Social Security payments through garnishment, levy, or any other legal process.1Office of the Law Revision Counsel. 42 U.S.C. 407 – Assignment of Benefits A person whose only income is Social Security or disability, with no home equity above the exemption, an older car, and little in the bank, is judgment proof today. That does not mean they will be judgment proof five or ten years from now.
Check for Insurance Before Anything Else
The single most important question before suing a broke defendant is whether an insurance policy covers the claim. If it does, the defendant’s bank balance is nearly irrelevant. The insurer pays up to the policy limits regardless of what the individual owns.
Car accidents are the clearest example. A driver’s liability insurance pays your medical bills, lost income, and other damages even if the driver personally has nothing. Homeowners and renters insurance work the same way for dog bites, slip-and-falls, and other injuries tied to a residence. Doctors, accountants, and contractors often carry professional liability policies that cover negligent work. Personal wealth matters only when damages exceed the policy limits or no coverage exists at all.
Find out which policies are in play before you dismiss a case. A lawyer can often identify coverage early, sometimes with a demand letter alone. If a personal injury attorney is willing to take the case on contingency, that is itself a strong signal that collection — usually from insurance — looks realistic.
A Judgment Lasts for Years and Earns Interest
A judgment is not a now-or-never proposition. In most states, judgments remain enforceable for anywhere from 5 to 20 years, and many states allow renewal for additional terms before the judgment expires. The 22-year-old with no assets today will probably have a career, a bank account, and property within a few years. Your judgment will still be there.
Unpaid judgments also accrue interest the entire time. In federal court, post-judgment interest is calculated using the weekly average one-year Treasury yield for the week before the judgment was entered.2Office of the Law Revision Counsel. 28 U.S.C. 1961 – Interest State court rates vary but commonly fall between 4% and 12% annually. On a $50,000 judgment at 8%, that is roughly another $4,000 added every year the debtor does not pay.
Taken together, the long enforcement window, renewal options, and running interest mean that getting a judgment now preserves and grows a legal claim for decades. That is often the real reason to sue someone who looks broke.
How You Actually Collect — And What You Can’t Touch
Winning does not put money in your pocket automatically. You become a “judgment creditor,” and the burden is on you to find assets and use legal tools to reach them. Collection generally starts with a writ of execution, a court order directing a law enforcement officer to seize non-exempt property.3U.S. Marshals Service. Writ of Execution From there, three tools do most of the work.
Wage Garnishment
If the debtor has a job, garnishment is often the most reliable option. Federal law caps garnishment for ordinary debts at the lesser of 25% of disposable earnings or the amount by which weekly disposable earnings exceed 30 times the federal minimum wage. At the current $7.25 minimum, that threshold sits at $217.50 per week.4Office of the Law Revision Counsel. 15 U.S.C. 1673 – Restriction on Garnishment Someone earning at or below that figure in weekly disposable pay cannot be garnished at all, and some states set tighter caps.5U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
Bank Levy
A bank levy freezes and seizes funds in the debtor’s account. You serve the writ on the bank, which places a hold. Protected deposits such as Social Security direct deposits cannot be touched. A levy captures only what is in the account at that moment, so it works best when you know non-exempt money has recently landed there.
Judgment Lien on Real Estate
If the debtor owns property, you can record an abstract of judgment with the county recorder to create a lien on their real estate.6U.S. Government Publishing Office. 28 U.S.C. Chapter 176 Subchapter C – Postjudgment Remedies The lien does not force a sale, but it attaches to the title. When the debtor eventually sells or refinances, the lien has to be paid off before the deal can close.7Legal Information Institute. Abstract of Judgment This is a slow strategy, and one of the most effective against someone with equity in a home and no cash.
After you win, post-judgment discovery becomes available: you can question the debtor under oath, send written interrogatories, and subpoena records from banks and employers. Ignoring these orders can bring sanctions, including contempt.
What the Lawsuit Will Cost You
Every dollar you spend chasing a judgment-proof debtor is a dollar you may never see again. Civil litigation attorneys typically charge either an hourly rate or a contingency fee. Hourly rates vary with location and experience, averaging around $300 to $350 nationally, and even a straightforward civil case can run into tens of thousands of dollars at trial.
Contingency fees, where the lawyer takes a percentage of what you actually collect, are common in personal injury cases and generally run from about 33% to 40% of the recovery. This arrangement shifts most of the financial risk to the attorney. When a personal injury lawyer declines a case on contingency, that is useful information: it usually means they have looked for insurance or collectible assets and come up empty.
For smaller claims, small claims court lets you file without a lawyer. Maximum claim amounts range from roughly $2,500 to $25,000 depending on the state. Filing fees are low, procedures are simplified, and hearings often come within weeks. The collection challenge is identical to any other court, but your out-of-pocket cost is far lower, which matters when the whole point is to secure a judgment and wait.
The Bankruptcy Risk
The moment the defendant files for bankruptcy, a federal injunction called the automatic stay freezes virtually all collection activity. Pending lawsuits stop, garnishments halt, and bank levies are blocked until the bankruptcy court lifts the stay.8Office of the Law Revision Counsel. 11 U.S.C. 362 – Automatic Stay In a Chapter 7, most unsecured debts, including many civil judgments, are discharged. That is the real downside risk of suing a broke defendant: they file, and the judgment becomes worthless.
Certain debts, though, cannot be wiped out. Federal law makes the following nondischargeable:
- Debts arising from false pretenses, misrepresentation, or actual fraud.
- Debts for willful and malicious injury to a person or property.
- Debts from embezzlement or larceny while in a position of trust.
- Debts for death or personal injury caused by drunk driving.
- Child support and alimony.
If your claim fits one of these categories, your judgment survives bankruptcy and stays fully collectible.9Office of the Law Revision Counsel. 11 U.S.C. 523 – Exceptions to Discharge You may need to file a separate action in bankruptcy court to establish that your particular debt qualifies, so moving promptly when you get notice of a filing matters.
Hidden Assets Are More Common Than You Think
Sometimes “no money” is a performance. A person facing a lawsuit may try to shift assets out of their name: property transferred to relatives, bank accounts drained into someone else’s, a car “sold” to a family member for a dollar. The law calls these fraudulent transfers.
Federal bankruptcy law allows transfers made with intent to cheat creditors to be unwound if they occurred within two years before a bankruptcy filing, and the same applies when the debtor received far less than fair value while insolvent.10Office of the Law Revision Counsel. 11 U.S.C. 548 – Fraudulent Transfers and Obligations Outside bankruptcy, nearly every state has a version of voidable transaction law that lets creditors claw back assets a debtor tried to put out of reach. Post-judgment discovery is where these schemes typically fall apart; a debtor who signed over a $200,000 house to a sibling six months before suit has a hard time explaining it under oath.
The Statute of Limitations Will Not Wait
While you weigh whether to sue, the clock is running. Every civil claim has a filing deadline, and missing it ends your right to sue no matter how strong the case. Personal injury deadlines in most states fall at two to three years from the injury. Contract disputes typically allow three to six years, with some states giving up to ten for written contracts.
This cuts against the instinct to wait and see if the person’s finances improve. Waiting too long means you lose the ability to file at all. The better move is usually to file within the limitations period, secure the judgment, and then wait as long as necessary to collect. A judgment outlasts a statute of limitations by many years and accrues interest the whole time.
So Should You Sue?
The decision comes down to a few honest questions. Is there an insurance policy behind the defendant? If yes, the “no money” problem largely disappears and you should probably proceed. Is the claim large enough to justify the cost of a lawyer, or small enough for small claims court? Is the debtor young or temporarily down on their luck, with realistic prospects of earning, inheriting, or buying property over the next decade? And does your claim fall into one of the categories a bankruptcy cannot discharge?
Suing an uninsured young adult over a car accident may feel pointless today, but a judgment plus accruing interest will be waiting when they get a career, a paycheck, and a house. Suing a retiree whose only income is Social Security and whose only savings sit in protected retirement accounts is much harder to justify. In between those cases, small claims court, contingency representation, and the simple willingness to secure a judgment and wait are all ways to keep costs low while protecting your rights. The worst outcome is not winning a judgment you cannot collect right away. It is letting the deadline pass and losing the right to collect at all.