It is necessary for the individual or business that you owe money to initiate legal action against you in order for them to be able to obtain a judgment against you. If you fail to respond to the action, the court will enter what is known as a “default judgment,” which is an automatic finding of guilt against you. It goes without saying that you still run the risk of losing the case even if you respond to the lawsuit.
What Occurs Subsequently Following the Entry of the Judgment?
A judgment has the potential to convert an otherwise uncollectible old credit account into an amount of money that can be collected. For instance, after a predetermined amount of time has passed, a statute of limitations may bar a creditor from attempting to collect money that you are legally obligated to pay. On the other hand, that same creditor may sue you in the hopes that you won’t respond to the case, which would give them the opportunity to win by default and get a judgment against you. If you had been in court, the statute of limitations would have made it impossible for the judge to rule against you. This type of defense is referred to as an “affirmative defense.”
Even if you win a case because the statute of limitations has run out, the fact that you failed to pay the obligation will still be shown negatively on your credit report.
There are many time constraints associated with the various sorts of debt. These differ from one another based on whether the agreement in question is verbal, written, a promissory note, or an open-ended account.
A judgment will normally include both the original amount and any accrued interest. From the moment the judgment is entered into the public record up to the moment, it is paid in full, interest may accrue. Other potential expenditures include going to court, hiring an attorney, and paying collection agencies.
A decision may remain valid for twenty years or even longer
A judgment may continue to be enforceable for anywhere from five to twenty years or even longer, depending on the state in which it was issued. That is a significant amount of time for a financial obligation to follow you around. In addition, judgments can remain on credit reports for as long as seven years and may continue to show up on background checks for as long as the judgments remain in effect, whichever period of time is longer.
What Rights Does a Creditor Have Regarding a Judgment?
Because a judgment constitutes a lien on the property in accordance with the laws of the state, it paves the way for several opportunities for creditors.
If the laws in your state allow it, the judgment can file a levy with the court and your employer, giving the employer instructions to seize a part of your salary so that the money can be paid to the creditor. Bank accounts are another potential target for garnishments.
You will be provided with some money to use for daily expenses. That sum fluctuates according to the state in which you reside.
However, private debts like credit card bills, vehicle loans, or medical expenses cannot be garnished or levied against pension benefits, Social Security payments, disability payments, unemployment benefits, or worker’s compensation benefits. These types of benefits are protected from legal action. They are able to be garnished in order to satisfy debts related to child support, alimony, and school loans.
Your creditor may take the judgment they have obtained against you to a sheriff and give them instructions to seize and sell whatever property you own in order to satisfy the debt. This kind of action, which is sometimes known as a “writ of execution,” can be pretty unsettling. 1011 Imagine a deputy coming to your house with that piece of paper, which gives them the right to remove your plasma TV or drive away in your vehicle.
In some places, creditors have the legal right to order the sale of a homeowner’s property. At the very least, the judgment will be recorded in the property records of your county. Because of this, when you sell or refinance your property, the title insurance will insist that the judgment be paid in full using the proceeds from the sale or refinance.
How Can You Refrain From Passing Judgment?
Look for a lawyer who has expertise in defending clients in matters involving debt collection and who is familiar with the Fair Debt Collection Practices Act (FDCPA). If your debt is very significant, it may be beneficial to consult with an attorney who specializes in bankruptcy law.
You should seek references from the bar organization in your state, your professional network, and other attorneys whose counsel you value and respect. Bring copies of your debt documents as well as any pertinent correspondence to the attorney so that they may review them.
Judgments can have a negative impact on your money and your career, and they can also make it impossible for you to acquire insurance, rent an apartment, or receive clearance for sensitive jobs. Therefore, it may be well worth your time to seek to negotiate a settlement before matters go to court and to fight any lawsuit that has been filed against you. This might be the case even if a lawsuit has been filed against you.
Questions That Are Typically Asked (FAQs)
In the event that a judgment has been entered against me, what alternatives do I have?
You have several options for settling your debt: you can pay the judgment in full, try to persuade the creditor to accept installment payments, file for bankruptcy, or have your wages garnished. Consult a legal professional first before taking any action so that you can have an idea of what your choices are.
If I can’t pay a judgment, will I be arrested and sent to jail?
Because the ruling concerns a civil matter, the answer is no. Infractions of criminal laws are what land people behind bars, not unpaid debts or other civil obligations.
How can I find out whether there is a judgment against me and what it entails?
The creditor may send you a letter or call; your payroll department may notify you that your wages are being garnished, or your bank may notify you that your account has been blocked. Additionally, your payroll department might send you a notice that your wages are being garnished.