Usually, a judgment is the ultimate and often, the final stage of debt collection. Fortunately, there are ways to make things less painful for debtors.
A judgment is nothing but a decision made by a court or other tribunal that resolves a controversy and determines the rights and obligations of the parties. A judgment is the final part of a court case.
In order for a judgment to take place, a court case needs to be filed by a plaintiff, and the defendant must answer and fight the lawsuit.
If a defendant doesn’t respond to or fight a lawsuit, a default judgment is entered.
If a defendant fights a lawsuit but lose, he or she faces a judgment.
What happens when a judgment is entered against you
When you go past due on a debt, the creditor makes every attempt to collect the debt from you. When he/she finds no luck, the account goes to a collection agency.
When the collection agency fails too, the matter is placed before a court. A lawsuit is filed against you and a judgment is availed to make you pay all the dues plus court and lawyer’s fees.
A judgment is simply a public record and is indexed by the clerk of the court. It shows up on your credit report as well as on any background checks.
A judgment is also considered as a lien against your property. However, a judgment filed in Illinois has no connection with properties located in Texas unless the creditor files the same judgment in a texas court too.
Read more: What happens to debt and judgments if you leave the U.S.?
What can a judgment do to you
If a judgment has been filed against you, the creditor can satisfy his/her interest by either freezing your bank account or withdrawing portion of your wages. What actually happens varies from state to state and depends on what is written in the judgment.
For example, in the New York, a credit needs to get in touch with an enforcement officer such as a marshal or sheriff after getting the judgment. After that the creditor can send a notice to the debtor. If the debtor is employed, the enforcement officer can even garnish wages to fulfil the judgment.
However, in the state of California, a creditor isn’t allowed to take any action for 30 days starting from the date the clerk mails the notice of entry of judgment. If the debtor doesn’t take necessary action by this time to resolve the case, the creditor can:
- Get in touch;
- Levy (seize) assets;
- Examine in court to locate unknown assets;
- Suspend driver’s license if the judgment is for auto accident;
- Suspend professional license (example: Contractor’s License); or
- Place a lien on land, buildings, or residence.
How to resolve a judgment
Once a judgment is made, no one can revert it back anymore. However, here are some comprehensive options for you to consider:
- Paying the dues in full
- Work with the creditor to settle the debt or find out a convenient payment plan
- Repay the debt involuntarily through a wage garnishee
- File for Chapter 7 or chapter 13 bankruptcy to discharge the debt altogether
A judgment is there to make your life more difficult, and the creditors know that this too well. Whatever you do, never ignore a judgment. This will only make things worse.
Don’t miss out: Ways to vacate default judgment when account is frozen
