It is not unusual for judgment creditors to bring in an attorney or collection agency to help collect what is owed to them. Creditors do have a number of enforcement mechanisms at their disposal. Nevertheless, those mechanisms are related to debtor assets. And not all assets are up for grabs.

Judgment Collectors, a specialized collection agency based in Salt Lake City, UT, says assets are divided into two categories for debt collection purposes: exempt and nonexempt. Exempt assets cannot be touched for debt repayment. They are completely off limits.

Below are some examples of exempt assets most states protect from collection efforts. Note that Judgment Collectors says the states categorize assets differently. Bear that in mind as you continue reading.

1. Most Wages

Wage garnishment is a common enforcement mechanism leveraged by judgment creditors. But most of what a judgment debtor earns is off limits. How so? Some states prohibit wage garnishment altogether. But they are the minority.

In states where wage garnishment is legal, all of a debtor’s wages are not up for grabs. Creditors are only allowed to garnish a certain percentage of a debtor’s disposable income. As an example, a debtor might need 75% of his income to pay for basic necessities. That means only 25% of his income is disposable. What’s more, the creditor might only be able to garnish 50% of that smaller amount.

2. Social Security Benefits

Social Security benefits are typically exempt from judgment collection. Income from Social Security is intended to cover a person’s basic necessities. There is no disposable income included in the benefits. Therefore, it is untouchable.

3. Veterans Benefits

Veterans’ benefits are similar to their Social Security counterparts. Like Social Security, veterans’ benefits are exempt from collection efforts. They are considered basic minimum income to those who receive them.

4. Unemployment Compensation

A person collecting unemployment compensation is being protected against total financial loss during a period of temporary unemployment. And because unemployment compensation is generally a fraction of what the person would have made while employed, it is considered basic income.

Here’s guessing you are seeing a trend. Any type of income that is considered necessary for covering basic necessities is off limits. But let us continue. There is more to talk about beyond income sources.

5. Retirement Accounts

Retirement accounts are considered assets. They are similar to investments for tax purposes. Despite that, retirement accounts are considered off limits for collection efforts. In some states, however, it is a different ballgame once a person begins withdrawing from his retirement account.

Some states also prohibit extra contributions to retirement accounts for the sole purpose of avoiding paying an outstanding judgment. Such contributions would be considered illegitimate and could be revoked under certain circumstances.

6. Debtor Homesteads

A person’s primary residence is also known as their homestead. Most states protect homesteads from collection in some way, shape, or form. Here are the two primary options states rely on:

• Total Exemption – Some states protect homesteads entirely. That means creditors cannot go after them at all. The one obvious exception here is a bank foreclosing on a home because the owner has not made mortgage payments.

• Partial Exemption – Some states protect a certain value of a primary residence. Perhaps the first $100K is protected. After that, any additional value is up for grabs.

Judgment Collectors says that judgment creditors only help themselves by learning as much as they can about exempt assets. Assets are leverage in judgment collection. So knowing exactly what is available makes it easier for a creditor to determine how to proceed with collection.