Last Updated on May 11, 2022 by Fair Punishment Team
Facing your financial struggles can be a challenge, and this can also be a complex and confusing path to try and navigate – especially if you have a lengthy and somewhat checkered financial history that has included a large amount of debt and defaults.
Judgments are one area where it can be tricky to keep track, but getting on top of your current judgments, and having an idea of what you are facing, is an important step in getting on top of your finances.
In the simplest terms, you are legally obligated to repay any money that you borrow from either a lender or a creditor. In the event that you fail to hold up your end of the bargain and repay the money, the creditor or lender will be able to sue you.
Should they be successful in this lawsuit, you can end up with a judgment against your name, and this can have a detrimental impact on your long-term finances. Being able to check out any existing judgments that are held against you, therefore, is crucial to helping you get back on track.
What Is A Judgment
A judgment will occur when a creditor or lender sues you for failing to repay your debt and wins this lawsuit in court. This is a method for the creditor to recover the money that you owe them, and gives them permission to pursue the debt in a number of ways, including wage garnishment where appropriate.
As well as the initial amount that you owe, judgments may also include other fees and expenses, including any fees charged by attorneys, and any interest that has accrued on the original sum. There are a number of ways that a judgment may be filed against you, and these include:
- You fail to appear in court – any failure to appear in court on your part means that the creditor automatically wins a suit that they have filed, and they will be permitted to file a judgment against you. This also applies if you fail to respond to the lawsuit in the correct and proper manner.
- You are legally responsible for the debt – you can still receive a judgment against you even if you take the correct action on the lawsuit, as long as the court rules that you are legally obligated to the debt. As a rule, you can only overcome a lawsuit with a solid defense – and an inability to pay the outstanding balance will not typically suffice.
What Power Do Creditors Have If There Is A Judgment Against You?
Once a creditor has successfully obtained a judgment against you, their next priority is to recover the money that you owe them, and there are a number of ways that they can choose to pursue this. Some property is exempt from being claimed by creditors, and this includes your house and any furnishings inside, as well as your clothes.
Others, however, will quality, and may be seized to meet your debts. There are a number of different types of “property”, and these include:
This is one of the most common options available to help lenders recover outstanding amounts; the lender or creditor will place a legal requirement on your employer to give them a certain percentage of your wages each pay period. This is known as “wage garnishment”, and will typically add up to around 10% of your gross wages in each pay period – the exact number will vary from state to state.
It should be noted that the Consumer Credit Protection Act ensures that creditors cannot take over 25% of your weekly wages, or any amount that you earn that is over 30 times the legal minimum wage – whichever is the lesser figure.
- Non Wage Garnishment
In addition to taking a portion of your wages, creditors and lenders will also have the power to freeze your bank account, and there is no legal requirement to warn you about this.
Any unemployment or veteran benefits, social security, or disability benefits cannot be garnished to pay a private debt, such as a credit card bill, but they can be used to meet outstanding debts such as child support, student loans, or alimony.
- Property Liens
If you have any real estate holdings and a judgment is filed against you, then the lender may place a lien on your holding and will notify lenders of this. This can cause problems if you attempt to sell or transfer the property, as you will be required to settle the debt before the transaction can take place. In some regions, such as New York, this happens automatically once the judgment is recorded against you.
- Property Levies
Another option available to lenders and creditors is a property levy, and this can apply to any personal belongings that are not counted as “exempt”. Any valuables, such as jewelry, can be sold at an auction, and a Writ of Execution could see law enforcement come to your home to demand your property in order to pay off your debt.
How Can I Check If I Have A Judgment Against Me?
In most cases, you will be aware of a judgment being filed against you, as you will receive a summons in person, or in the mail, and you will be required to appear in court. If you don’t show up, a default judgment will be automatically filed against you – as a result, if you fail to appear or respond to a summons, you can assume that you have a judgment filed against you.
You can also call the court that is listed on the summons, who will be able to confirm whether you have a judgment filed, and a notification of this action will also be sent to you via mail.
In some cases, however, you may have moved house, changed address, or accidentally thrown the mail away without checking it – this means that you could have had a judgment filed against you without you realizing it, and you may not be aware of an issue until your wages are garnished, or collections activity occurs.
Judgments will also not be shown if you pull your credit report – you would need to run a specific search for judgments through the country recorder’s office, or through a title company. Remember: judgments can last against you for up to 20 years, so it is important to know where you stand as soon as possible.
What Can I Do If I Have A Judgment Against Me?
So, you have received the summons, seen the notification, or run a check, and discovered that there is a judgment against you. The next question is: what can you do about it? There are three options when it comes to handling your judgments, and these are as follows:
- Vacate The Judgment
Vacating a judgment essentially renders it void, and is unlikely to happen if you appeared in court after receiving the summons, and had the judge rule against you.
If, however, you did not appear in court, and subsequently had a default judgment ruled against you, then you may be in a position to challenge it – particularly if you can prove that you were not correctly notified and informed about the complaint and summons. As part of this, you will need to be prepared to explain to the judge your reasons for failing to appear in court.
Should you be successful, you may be in a position to contest the case, and this can result in a more favorable settlement. Note that if you have already started to pay towards the debt, or had your wages garnished, vacating the judgment is unlikely to be successful.
- Satisfy The Judgment
If you are unsuccessful in your attempts to vacate the judgment, another option may be to satisfy it, and this is usually through completing the terms of the judgment, be that through property lien or wage garnishment. Alternatively, you may have the option to come to a settlement, where lenders agree to settle for a sum that is less than the total debt owed.
In most cases, this will require a lump-sum payment and will render the judgment satisfied. A good financial attorney is useful here, as they will be able to negotiate with creditors on your behalf to reach a fair settlement, as well as ensure that the judgment is disposed of correctly once it is satisfied, to ensure that it does not crop up again in the future.
Once your judgment is satisfied, or terms have been agreed upon, ensure that you have everything in writing before you proceed.
- Discharge The Judgment
A last resort can be to discharge the judgment through bankruptcy, but this is not typically recommended. Going bankrupt can have a devastating impact on your long-term financial health, and so this should really be the last resort – you may also end up paying back a large portion of the debt anyway.
Judgments can have significant, negative, and often worrying impacts on your wider life and long-term financial stability.
They could limit the wages you earn or cost you your property, and make it difficult for you to get certain jobs, buy a house, rent an apartment or obtain insurance further down the line. If you have a joint account with a spouse, they can also be negatively impacted for years to come.
While judgments are not pleasant, there are options available – and learning that you have a judgment is a crucial first step. In an ideal world, however, you would avoid this altogether by paying your debts and meeting your financial obligations.
If you are facing a lawsuit, struggling to pay a debt, or having financial issues, contact an experienced financial attorney to set you on the right path – before things get out of hand.