When a creditor sues you to collect debt you haven't paid, you have three choices to deal with the lawsuit: allow the creditor to obtain a judgment against you (called a "default judgment") defend the lawsuit yourself, or hire an attorney to represent you in the lawsuit. Which option is best for you will depend on a number of factors.
Sep 02, 2020 · If you're sued by a creditor for unpaid debt, it can result in an outstanding judgment against you, which means you could lose wages or property. Call for a free consultation (866) 890-7337 Debt Relief Services
Jul 20, 2021 · The Judgment. If a creditor files a lawsuit against you to recover money owed, and they win, the court will issue a judgment against you. This is sometimes called a money judgment, and it allows the creditor to initiate judgment collection efforts. Once a judgment has been entered against you, the creditor may now be referred to as a judgment ...
When a creditor sues you to collect debt you haven't paid, you have three choices to deal with the lawsuit: allow the creditor to obtain a judgment against you (called a "default judgment") defend the lawsuit yourself, or. hire an attorney to represent you in the lawsuit. Which option is best for you will depend on a number of factors.
Even if you don't end up hiring a lawyer, an experienced debt settlement attorney can help you evaluate the creditor's case and your personal circumstances to determine the best course for you.
If you owe the amount that the creditor is seeking in its lawsuit, hiring a lawyer might be a waste of time and money. If you don't have a defense or counterclaim and the creditor can easily prove its case, then you'll lose. You'll then owe the judgment amount, have to pay your own attorney, and might have pay the creditor's attorneys' fees too. (In some types of cases, the losing party has to pay the other side's attorneys' fees).
If you win on your counterclaim, you might get a money judgment against the creditor. Your filing of the counterclaim might also induce the creditor to withdraw its lawsuit against you.
A defense is a reason why you aren't liable for the debt or a reason why the creditor shouldn't be allowed to collect the debt. Here are some common defenses to creditor suits: the statute of limitations (the time period in which the creditor must bring the lawsuit) has run.
Being judgment proof really means that you are collection proof. That is, if the creditor gets a judgment against you, can it collect it through wage garnishment, taking your bank account funds, or the like? If not, you are judgment proof. (Learn more about what being judgment proof means .)
the creditor can't produce the original paperwork to prove you owe the debt. (Learn more about common defenses in collection lawsuits .)
If a creditor files a lawsuit against you to recover money owed, and they win, the court will issue a judgment against you. This is sometimes called a money judgment, and it allows the creditor to initiate judgment collection efforts.Once a judgment has been entered against you, the creditor may now be referred to as a judgment creditor and you may be referred to as a judgment debtor.
Your total earnings per week are $480.00. If your income after deductions is $418, then the maximum a judgment creditor could take is 25% of $418, which is about $105.
Now, judgment creditors can enforce a judgment by registering the judgment in the state where a debtor currently lives, generally by using an authenticated copy of the judgment and a sworn affidavit. An affidavit is a document wherein either the judgment creditor or their attorney swears to the judgment’s authenticity.
Wage garnishments occur when a judgment creditor takes a portion of a debtor's wages. Garnishment is a favored way to collect money because it’s cash and a creditor doesn’t have to sell property to get paid. For creditors, it's like taking money out of a cash register.
Depending on the kind of debt you owe, a creditor may be able to take your personal property, like your car, and put liens on real property, like your house.
If you are overdue on a payment owed to a creditor, you might be running the risk of a deficiency lawsuit and judgment against you. If you ignore the lawsuit, you might find out that your creditor has taken money right out of your bank account. This might seem extreme, but if a creditor gets a judgment against you in court, they can take the money out of your debit account by putting a bank levy on it for the money they’re owed.
The discovery process is often unpleasant, but failure to comply with this kind of request could result in the court holding you in contempt. It's rare, but in some states, it's possible to be sent to jail for contempt of court infractions. Some advocates call jail time for contempt the modern equivalent of debtor's prison.
Judgments give debt collectors much stronger tools to collect the debt from you. Depending on your situation and your state’s laws, the creditor may be able to: 1 Garnish your wages 2 Place a lien against your property 3 Move to freeze or garnish all or part of the funds in your bank account
If you ignore a court action, it's likely that a judgment will be entered against you for the amount the creditor or debt collector claims you owe.
A judgment is a court order.
A judgment is a court order. Only the court can change it. It's very difficult to get a judgment changed or set aside once the case is over. You have a much better chance to fight a collection in court if you defend the case than if you wait until a judgment is entered against you.
1 . If your state allows it, the judgment can file a levy with the court and your employer, instructing the employer to garnish a portion of your wages, to pay the creditor.
If you ignore the lawsuit, the court will enter an automatic judgment against you, known as a default judgment. 1 Of course, even if you file an answer to the lawsuit, you can still lose the case.
Your creditor can present the judgment against you to a sheriff, instructing them to seize and sell your property, to pay off judgments. This action, called a "writ of execution," can be extremely unnerving. 10 11 Imagine a deputy knocking on your door with that piece of paper, entitling them to take your plasma TV or drive off in your car.
Depending on your state, a judgment remains valid from 5 to 20 years or more. 5 6 That's a long time for a debt to follow you around. Furthermore, judgments show up on credit reports for up to seven years and may appear on background checks until the judgments expire, whichever is longer. 7 .
If you beat a case because the statute of limitations has expired, failure to pay the debt will still affect your credit record. 4 Different types of debt have different time limits. These vary depending on if it's an oral agreement, written contract, promissory note, or open-ended account. A judgment typically consists ...
If your state allows it, the judgment can file a levy with the court and your employer, instructing the employer to garnish a portion of your wages, to pay the creditor. Garnishments may also target bank accounts.
Judgments can disrupt your finances and your job, and they can prevent you from obtaining insurance, renting an apartment, or gaining security clearances. Therefore it is well worth the effort it takes to attempt to negotiate a settlement before things get into court and to defend any lawsuit filed against you .
If you have a judgment against you, you might be thinking that you should just pay the judgment and get it released. And it’s true, that’s one way to handle it. You could contact the judgment creditor and work out terms to pay the judgment. But that may not be a good idea.
Get a copy of your judgment from the court where it was entered. Once you get a copy of the judgment, you can call the law firm that handled the lawsuit and go from there. Maybe that law firm is still handing your account, or maybe it isn’t. The creditor might have “taken the account back” from the law firm. If the creditor has taken the account back, then you need to contact the creditor directly. In many cases, the creditor doesn’t even own the judgment any more, because they sold it to a third party “judgment buyer” company.
Most creditors will file the release of judgment within 30-60 after you finish paying them.
Bottom line: you just need to keep calling around until you figure out who you need to pay.
Not immediately, no. The credit bureaus might not even “pick up on” (notice and process) your release of judgment. If they don’t “pick it up,” then they will not update your credit report. Even if they do “pick it up,” they might leave the judgment on your credit report for several more years.
No. What appears on your credit report, if anything, is the amount of the judgment at the time the judgment was entered. There could be, and probably will be, additional interest and legal fees owed. Your credit report will not say whether “post judgment interest” or additional legal fees are even allowed, much less how much they are.
Don’t ever forget that the creditor sees you as one thing and one thing only: a person they can make money off of. The more desperate you are to settle your judgment, the more they’re going to make you pay. If you need a favor from them, like getting them to release the judgment in 2 days instead of 60, they will probably do it, but you’re going to pay for it.
A judgment creditor who receives a reasonable offer to pay will often stop a lien, levy, wage attachment, garnishment suit, or assignment order. (For tips on negotiating with creditors, see Strategies for Negotiating With Creditors .) You might consider contacting a debt counseling agency for help in negotiating and setting up a repayment plan.
If a creditor sues you and gets a judgment, it has a whole host of collection methods available to get its money from you, including wage attachments, property levies, assignment orders, and more. Fortunately, in many situations you can still take steps to try to head off collection efforts. Read on to learn how to prevent a judgment creditor ...
You might be able to prevent collection of a judgment by negotiating with the creditor or claiming property as exempt.
You can request a hearing, which is usually called something like a claim of exemption hearing, to argue that it will be a financial hardship on you if the property is taken, or that your property is exempt under state law.
If you need more information about exemptions or want help with a hearing, consider talking to a lawyer.
In most states, your clothing, furniture, personal effects, and public benefits can't be taken to pay a debt. Nor can some of the equity in your car and house, most of your wages, and most retirement pensions. (Learn more about Using Exemptions to Protect Property From Judgment Creditors .)
Still, you can request a claim of exemption hearing if the debt (now part of the judgment) was for a basic necessity. The creditor may not challenge your claim. Or, the judge might not care whether the debt was for a basic necessity and may consider only whether or not you need the money to support your family.
Judgment creditors will usually first go after your paycheck through a wage attachment (or "wage garnishment"). A wage attachment is a very effective technique for a judgment creditor if you receive regular pay. Your employer takes a portion of your wages each pay period and sends that money to your creditor before you ever see it.
Federal law allows the judgment creditor to take up to 25% of your net earnings or the amount by which your weekly net earnings exceed 30 times the federal minimum wage, whichever is less. "Net earnings" are your gross earnings less all legally mandated deductions, such as withheld income taxes and unemployment insurance.
In the rest of the states, the creditor must record the judgment with the county, and then the recorded judgment creates a lien on your real property. In a few states, the lien is on your real and personal property. Liens have a lifespan of a few to several years. Sometimes, creditors can renew liens. If a judgment creditor doesn't get ...
One collection device that judgment creditors commonly use is the property lien. In about half the states, a judgment entered against you automatically creates a lien on the real property you own in the county where the judgment was obtained. In the rest of the states, the creditor must record the judgment with the county, and then the recorded judgment creates a lien on your real property. In a few states, the lien is on your real and personal property. Liens have a lifespan of a few to several years. Sometimes, creditors can renew liens.
To attach your wages, a judgment creditor obtains authorization from the court in a document usually called a "writ.". Under this authorization, the judgment creditor directs the sheriff to seize a portion of your wages. The sheriff, in turn, notifies your employer of the attachment, and your employer informs you.
What property the creditor can take varies from state to state. Usually, the creditor can go after a portion of your net wages—typically up to 25%, more if the judgment is for child support—bank ...
If you ignore all IRS attempts to collect taxes you owe, the government can grab virtually all of your wages. The weekly garnishment amount (called a "levy") is based on the standard income tax deduction, plus the amount for each personal exemption you are entitled to on the income tax form, divided by 52 weeks.
If a creditor sues you in court for a sum of money and you lose the case, the creditor will get a judgment. That creditor may then obtain a judgment lien, which is a lien that attaches to your real estate, usually by filing a copy of the judgment in the county records. Though, sometimes a lien is created automatically when the court enters ...
Generally, a judgment creditor with a lien gets paid when the debtor sells or refinances the home. But if the creditor chooses not to wait for a sale or refinance, the creditor can execute on the lien by asking a court for permission to sell the debtor's real estate. So, if you have enough equity in your home, a judgment creditor might be able ...
So, $300,000 to $600,000 of a home's equity, depending on the median sales of homes in the county where the property is located, can't be touched by judgment creditors. (But as is typical, those who use their homes as collateral for loans aren't protected; the lender has the right to foreclose, and the borrower won't qualify for the exemption.)
Though, sometimes a lien is created automatically when the court enters the judgment. This process converts the judgment from an unsecured debt to secured debt. In some cases, the judgment creditor can force the sale of your property to get paid.
Some states require that the debtor record a homestead declaration before the exemption is available.
Judgment creditors can force the sale of your home to get paid, but they rarely do this.
However, if the property is exempt due to a homestead exemption, the creditor can't do this.