Aggressive collectors or creditors will not hesitate to go to court to file a suit for judgment that seeks remedies for a debtor’s liability. This is especially true if they know that the debtor owns various properties and other valuable assets. Once a court issues a judgment, the debtor’s assets can be seized, confiscated, garnished, liquidated, or auctioned off.
To keep this from happening, there are ways of keeping assets from being collected by way of a court decision. The practice is called judgment proofing.
Judgment Proofing Defined
By legal definition, defendants are said to be judgment proof when they are financially insolvent. This means that the defendant’s assets or funds are unavailable, inaccessible or simply inadequate to satisfy the judgment of the court. Hence, there is a sense of immunity even if the claimant gets a judgment to his favor since there is nothing identifiable that will fulfill the requirements of the court’s decision.
In reality, the defendant is not immune to the judgment but rather to the execution of the judgment. Should the debtor gain a source of income, for example from new employment, the plaintiff may opt to move for wage garnishments as you are no longer in a state of being “judgment proof”.
Being judgment proof is therefore a temporary status and certainly not the best state to be in. Avoiding judgment altogether or getting out of a judgment through a settlement is more preferable from the standpoint of maintaining some degree of financial stability.
How to Judgment Proof Assets Effectively
At any rate, judgment proofing one’s assets has its merits but should be done well in advance, using an offshore asset protection plan, as an ideal example. An ill-timed asset protection plan can put an entire portfolio at risk rather than secure it from creditor’s reach.
Basically, the simple rule of thumb for making your assets judgment proof is to keep them anonymous and inaccessible. Offshore asset protection can be secured by using offshore services such as anonymous corporations and foundations in Panama, which are ideal examples for this. In Panama, bank secrecy is paramount. Also, the country does not hold joint treaties that would honor foreign civil judgments to be executed in their sovereign territory.
Availing yourself of these offshore asset protection structures to protect your assets in Panama can prove very effective. It will be more beneficial for collectors and creditors to agree to a cheap settlement than to try and hunt down your assets which are effectively shielded by offshore services in an investment haven like Panama.
About Collection Lawyers
Most seasoned collection lawyers are not uninformed about offshore asset protection strategies and will most likely be on the lookout in case a debtor has failed to make preparations to protect his or her assets in a timely and suitable manner. They would suspect that you would be using offshore services to shield your assets and will try to catch you off-guard to build up their case and chase after your properties.
Usually, you would be called on to issue a post-judgment deposition. Be sure to have your attorney at hand to advise you on the best course of action. At other times they will try to get a repatriation of funds order or pin you for fraudulent conveyance. Without documentary evidence on these allegations, they will rarely gain ground for a case worthy of a judge’s attention. Again, your legal adviser should be able to assist you under such circumstances.
Through judicious use of offshore asset protection structures enjoyed by many in Panama, you can easily keep your assets out of the hands of grubby creditors. Collection attorneys know that it is not easy and even nearly impossible to have a judgment stick on encumbered and unknown accounts and assets shielded by offshore services in a foreign land. Often, these collection lawyers will be the first to turn and try to convince their client to settle amicably.
Sell the Settlement
As long as the assets remain anonymous and inaccessible, pursuing the judgment will prove to be a waste of precious time and valuable resources for the collector or creditor. Certainly, the financial offshore services in Panama are sure to keep one’s assets protected.
By offering and pushing for a settlement, you are in effect extending a gesture of goodwill which in most cases will be favored by the courts. The creditor recovers a portion of the debt, the collection attorney gets paid as well and the debtor gets the case dismissed. Be sure that the settlement agreement is witnessed and signed by the judge to make it binding.