If you get sued but have no money, you still have to respond to the lawsuit, and if you lose, a creditor can try to collect, but federal and state exemption laws may protect your income and property from being seized. Having no assets doesn’t end the case or erase the debt. It changes what the creditor can actually do with a judgment, which in some situations is very little, and in others is a slow squeeze that lasts for years.
Respond to the Lawsuit, Even with Empty Pockets
When you’re served, you’ll get a summons and a complaint. The summons names the court and gives your deadline to answer. The complaint lists what the plaintiff says you did and how much they want. In federal court, you have 21 days from the date of service to file a written answer.1Legal Information Institute. Federal Rules of Civil Procedure Rule 12 – Defenses and Objections State courts set their own deadlines, often somewhere in the 20-to-30-day range. The date printed on your summons is the one that controls your case.
Your answer is a written document filed with the court. It responds to each allegation by admitting it, denying it, or stating that you don’t have enough information to respond. It’s also where you raise defenses. Common ones include the statute of limitations, lack of standing, that the matter was already resolved in another proceeding, or that the plaintiff failed to mitigate their losses. If you don’t raise certain defenses in the answer, you can lose the right to raise them later.
Fee Waivers if You Can’t Pay to File
Most courts charge a filing fee. If you can’t afford it, federal courts let you request a waiver by submitting an affidavit of your finances.2Office of the Law Revision Counsel. 28 USC 1915 – Proceedings In Forma Pauperis State courts have similar processes, often tied to receipt of public benefits like SSI or food assistance, or to an income threshold set as a percentage of the federal poverty level. Ask the court clerk for the waiver form before assuming you can’t afford to answer.
What a Default Judgment Costs You
Ignoring the lawsuit is the single worst move. If you miss the deadline and file nothing, the plaintiff asks the court for a default judgment, and the court grants it because no one showed up to contest anything. Every allegation in the complaint is treated as true.3Legal Information Institute. Federal Rules of Civil Procedure Rule 55 – Default and Default Judgment You lose without being heard.
A default judgment gives the creditor the same tools as any other judgment: wage garnishment, bank levies, liens on property. Any defense you had, including that the debt was too old or the amount was wrong, is gone.
Courts can sometimes undo a default, but the standard is high. You generally have to show the failure to respond was caused by a genuine mistake or circumstances beyond your control, not neglect, and that you have a real defense worth hearing. The longer you wait, the harder it gets. Filing even a basic answer on time avoids the problem entirely.
What “Judgment Proof” Actually Means
Being judgment proof is a practical reality, not a legal status. It means a creditor has a valid judgment against you but can’t collect, because every dollar you earn or own falls within legal protections. The creditor is left holding a piece of paper that entitles them to money they can’t reach.
The debt doesn’t vanish. The judgment stays on the public record, damages your credit, and the creditor can try again whenever your circumstances change. Judgments typically last between 5 and 20 years depending on the state, and most states let creditors renew them before they expire. A federal judgment lien lasts 20 years and can be renewed for another 20.4Office of the Law Revision Counsel. 28 USC 3201 – Judgment Liens A judgment entered against someone in their 30s can still be enforceable in their 60s.
Unpaid judgments also accrue interest.5Office of the Law Revision Counsel. 28 USC 1961 – Interest State rates vary. Being judgment proof today doesn’t freeze the balance, so if your income improves later, you’re facing a bigger number than the one on the original judgment.
What a Creditor Can and Can’t Take
Once a creditor has a judgment, they have several legal tools. Knowing them helps you see which protections matter for your situation.
Wage Garnishment
A creditor can ask the court to order your employer to withhold part of your paycheck. Federal law caps this at 25% of your disposable earnings (what’s left after legally required deductions like taxes). There’s also a floor: if your weekly disposable earnings are less than 30 times the federal minimum wage of $7.25 per hour (so $217.50 a week), your wages can’t be garnished at all.6Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment Some states set tighter caps. If you earn very little, this protection alone can make you judgment proof on the income side.
Bank Account Levies
A creditor can also get a court order to freeze and seize money in your bank account. If your account contains federal benefit payments like Social Security, a federal regulation requires the bank to automatically protect those funds. The bank looks at the two months before the levy and shields any amount deposited by a federal benefit agency during that period.7eCFR. 31 CFR Part 212 – Garnishment of Accounts Containing Federal Benefit Payments You don’t have to file paperwork first; the bank does it.
Money in your account from other sources, like a paycheck or a gift, is generally fair game unless your state adds protection. That’s why many judgment-proof people keep very little in a bank account.
Property Liens
A judgment creditor can file a lien against real estate you own. The lien doesn’t force an immediate sale, but it attaches to the property and has to be paid when you sell or refinance. Federal judgment liens last 20 years with the option to renew for another 20.4Office of the Law Revision Counsel. 28 USC 3201 – Judgment Liens State durations vary, commonly 5 to 20 years, often renewable.
Income and Property the Law Protects
Exemption laws are what actually make someone judgment proof.8Office of the Law Revision Counsel. 11 USC 522 – Exemptions They put specific income and property out of reach of private creditors.
Protected Income
Several federal benefits are shielded from garnishment by private creditors: Social Security, Supplemental Security Income, veterans’ benefits, federal employee retirement payments, and railroad retirement benefits.7eCFR. 31 CFR Part 212 – Garnishment of Accounts Containing Federal Benefit Payments If your only income is one of these, a credit card company or medical debt collector has almost nothing to garnish.
The federal government itself is a different story. It can reach these benefits for unpaid federal taxes, defaulted federal student loans, and court-ordered child support or alimony.7eCFR. 31 CFR Part 212 – Garnishment of Accounts Containing Federal Benefit Payments
Protected Assets
Employer-sponsored retirement accounts like 401(k)s and pensions carry strong federal protection. Under ERISA, benefits in these plans generally cannot be assigned to creditors or seized to satisfy judgments.9Office of the Law Revision Counsel. 29 USC 1056 – Form and Payment of Benefits The main exception is a qualified domestic relations order connected to divorce, child support, or alimony. IRAs are protected differently, and outside of bankruptcy the rules vary by state.
States also exempt other categories of property. Amounts vary widely, but the common categories include:
- A homestead exemption that protects some equity in your primary residence. A few states cap it at modest amounts, while others offer unlimited protection subject to acreage limits. The federal bankruptcy homestead exemption is $31,575.
- A motor vehicle exemption, often somewhere between $2,500 and $7,500. The federal bankruptcy figure is $5,025.
- Household goods: the furniture, appliances, and clothing your family uses day to day.
- Tools of the trade, meaning equipment you need for your job.
You Usually Have to Claim Exemptions Yourself
Protection for federal benefits sitting in a bank account is automatic. Most other exemptions are not. When a creditor levies your account or garnishes your wages, you’ll typically get a notice and a short window to file a claim of exemption with the court or the levying officer. The deadline can be as short as 10 days from the levy, so moving fast matters. Miss it and you can lose money the law would otherwise have protected.
Ways to Resolve the Debt
Being judgment proof buys time. It doesn’t close the case. If you expect your income to grow, or you just want the matter behind you, there are ways out.
Negotiating with the Creditor
Creditors know that chasing a judgment-proof debtor costs money and produces nothing. That gives you leverage. Many will accept a lump-sum settlement for far less than the full judgment, or agree to a payment plan sized to what you can actually pay. Get any deal in writing before you send money, and make sure it says the agreed payment satisfies the judgment in full.
Chapter 7 Bankruptcy
Chapter 7 can wipe out most unsecured debts, including credit card balances, medical bills, and money judgments from lawsuits.10Office of the Law Revision Counsel. 11 USC 727 – Discharge The moment you file, an automatic stay halts all collection activity: garnishments, levies, and pending lawsuits.11Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
To qualify, your income generally has to fall below your state’s median for a household of your size, or you have to pass a means test showing you don’t have enough disposable income to repay debts through a plan. Very low income usually means you qualify.
Bankruptcy has costs. It stays on your credit report for up to 10 years, and there are filing fees (waivable) and sometimes attorney costs. For someone already judgment proof, it makes the most sense when you expect your income to rise and don’t want old judgments waiting to swallow it.
Debts Bankruptcy Won’t Erase
Several categories of debt survive bankruptcy:12Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
- Child support and alimony.
- Certain taxes, including recent income taxes and taxes tied to a fraudulent or unfiled return.
- Debts obtained through fraud or false pretenses.
- Debts from willful and malicious injury to another person or their property.
- Government-backed student loans, unless you can show undue hardship, which is a difficult standard to meet.
- Criminal restitution and fines.
If your judgment falls into one of these categories, bankruptcy won’t clear it, though it can still eliminate other debts and free up money to deal with the one that remains.
Getting Legal Help When You Can’t Pay
Being broke doesn’t necessarily mean going without a lawyer. Legal aid organizations funded by the Legal Services Corporation provide free civil legal help to people whose household income is at or below 125% of the federal poverty guidelines. For 2026, that’s up to $19,950 for a single person and $41,250 for a family of four.13Federal Register. Legal Services Corporation 2026 Income Guidelines You can find a local office through lsc.gov.
If you don’t qualify for free representation, ask about limited scope representation, sometimes called unbundled legal services. Instead of hiring a lawyer for the whole case, you pay for specific tasks: drafting your answer, reviewing a settlement offer, preparing for a hearing. It costs a fraction of full representation and can be the difference between a coherent defense and a missed deadline.
Many courts also have self-help centers where staff can explain forms and procedures, though they can’t give legal advice. Law school clinics are another option, especially for straightforward debt defense.
Whatever path you choose, stay engaged. File the answer. Claim your exemptions when a creditor moves on your paycheck or your account. Keep the paperwork. A lawsuit against someone with no money ends badly only if the person with no money stops participating.