First of all, I should make one thing clear: being "judgment-proof" is not a legal defense to liability.
You can't go into court and say "I'm judgment-proof, therefore the lawsuit should be dismissed." Whether or not you can actually satisfy a judgment has no bearing on your liability, and the court's ability to impose the judgment. And if you are found liable, that judgment can follow you around for the rest of your life, or until you pay it, creating problems at every turn.
The term "judgment-proof" simply refers to a practical consideration faced by all plaintiffs: given the financial situation of the defendant, how easy or difficult will it be to actually collect the judgment? A plaintiff might decide that, even if they win, the defendant has so few assets that collecting the judgment could take more time or effort than it's worth.
If you're employed, and lose this lawsuit, the plaintiff may be able to garnish a percentage of your wages until the judgment is satisfied. There are many other procedures through which a judgment can be enforced, as well.
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