Worried about being sued for a debt that you cannot pay just yet? Fret not, because as stressful as it may seem, the law still has protections in place. Arizona, like other states, has laws that protect certain property and income from creditors. These protections are called exemptions. The idea is simple: even if you owe money, the law recognizes that you still need a roof over your head, a way to get to work, and basic necessities to survive. Creditors simply cannot take away everything you own. Thus, if all you have falls under these protections, then you’re considered judgment proof.

Being judgment proof does not mean you no longer owe the money. It does not magically erase your debt, nor stop a creditor from suing you. What it means is that, under Arizona law, you do not have spare property or income that the creditor can legally take away. In other words, even if the creditor wins in court, they cannot collect anything from you right now. You still owe the debt and the judgment can last for 10 years. This allows you a considerable amount of time to work, save up, and settle your accounts.  

Key Exemptions in Arizona

Arizona law provides exemptions that protect certain income and property. Here are some of the main protections:

Income Protections

Wages: Only a portion of your wages can be garnished. By law, creditors can take the lesser of 25% of your disposable income or the amount over 30 times the federal minimum wage (A.R.S. § 12-1598.16). Wages may be protected if they fall below the garnishable limits set by 15 U.S.C. § 1673 and A.R.S. § 33-1131.

Government benefits: Social Security benefits, SSI, certain retirement benefits, veterans’ benefits, and unemployment compensation are generally exempt from garnishment under both federal and Arizona law.

• Social Security & SSI – 100% exempt from garnishment (42 U.S.C. § 407).
• Unemployment & Public Assistance – protected under A.R.S. § 33-1131.

Property Protections

Homestead: Arizona homestead exemption protects up to $250,000 equity in a home (A.R.S. § 33-1101). So, if you own and live in your house, it is protected from most creditors. That means if your equity is under that amount, they can’t force a sale to pay off a judgment. 

Motor Vehicle: Arizona law protects up to $15,000 of equity in one car, or up to $25,000 if you’re disabled (A.R.S. § 33-1125(8)).

Household Goods & Personal Items: Essential items like furniture, appliances, and clothing are exempt up to certain limits (A.R.S. § 33-1123, § 33-1125). This includes the refrigerator, microwave, washing machine, lighting fixtures, heating equipment, and other household items necessary for a habitable living. 

Tools of Trade: The law protects up to $5,000 in equipment for work. (A.R.S. § 33-1130(1)) This includes the tools, supplies, machines, gadgets, and other devices that are used for a specific livelihood or profession. For example, a creditor cannot seize a graphic designer’s laptop that is being used to perform work. The same goes for a baker’s oven, a carpenter’s power tools, or a musician’s instruments.

Retirement Accounts: Most ERISA-qualified pensions and retirement accounts are exempt (A.R.S. § 33-1126(B)).

What Being Judgment Proof May Look Like in Real Life

Here are some judgment proof scenarios:

• Maria, a retiree
  Maria lives only on her monthly Social Security check. She rents an apartment, has no savings, and drives a modest older car well within the exemption limit. A credit card company sues her and wins. But since Social Security income is exempt from garnishment and she has no non-exempt property, the creditor can’t collect a dime. Maria is judgment proof.
• James, a low-wage worker
  James earns minimum wage and supports his two kids. Arizona law says creditors can’t take more than 25% of his disposable income. Since his income is already so low, that amount is tiny and sometimes it’s nothing at all. Add in the fact that he rents and has only basic household items, and there’s nothing for creditors to go after. James is judgment proof too.
• Sandra, a homeowner
  Sandra owns her home and has $300,000 in equity. That falls under Arizona’s $400,000 homestead exemption. Even if a creditor wins a lawsuit, they can’t force her to sell her house to pay them. As long as she keeps her equity under the exemption amount, Sandra’s home is safe.

Important Reality Check

Being judgment proof is not a permanent shield. If your financial situation changes, creditors may come back. In Arizona, a money judgment is good for 10 years and can be renewed for another 10 (A.R.S. § 12-1551). So if you inherit money, win a big prize, buy property, or get a higher-paying job, creditors could again try to collect from you.

Also, being judgment proof doesn’t erase your debt. It still exists, and it can still hurt your credit. Creditors can keep calling. You may still face stress until the statute of limitations runs out or you deal with the debt another way, such as through bankruptcy or negotiation.

To sum it up, if you’re living paycheck to paycheck in Arizona and have little more than the essentials, you may already be judgment proof. That means a creditor can sue you, but they can’t take what you don’t have. Still, knowing your rights can give you some peace of mind. And if you ever find yourself in this situation, seek legal aid to help you make the best decision for your circumstances.