The Judgment-Proof Society


This article presents the first article-length treatment of the legal rules that enable uninsured and underinsured individuals to escape tort liability by sheltering their income and assets from collection. These legal barriers to collecting tort judgments include limits on wage garnishment, homestead exemptions, retirement-plan exemptions, discharge in bankruptcy, spendthrift trusts, offshore asset protection trusts, and more. Of course, indigent persons would be judgment-proof even without these rules, because they have so few assets and so little income. Contrary to the myth of personal tort liability that is standard in torts scholarship and teaching, however, these legal rules enable huge numbers of working-class, middle-class, and affluent people to be (or become) judgment-proof despite the fact that they have decent incomes and significant assets that could be used to satisfy a tort judgment. The article describes the most important of these judgment-proofing rules in depth, demonstrates that they seriously undermine the deterrence and corrective justice goals of tort law, argues that they lack any persuasive justification, proposes specific reforms to reduce the judgment-proof problem, and evaluates the political feasibility of this agenda. It also discusses the important role of liability insurance in dealing with the residual threat of personal tort liability, and suggests ways in which increased use of mandatory liability insurance could contribute to solving the judgment-proof problem.



Date of this Version

March 2006