A judgment is an award of money given to a plaintiff in a civil lawsuit. A judgment is a non-criminal legal award, usually damages. Damages are most often money amounts. A judgment is received by the plaintiff when their lawsuit was successful. A judgment can be awarded by a judge or a jury. In some cases, a judgment is automatically awarded because a defendant fails to appear in a civil lawsuit.
A judgment usually remains valid for five to seven years. The time frame varies across jurisdictions. In some states, for example New York, the judgment is valid for up to twenty years. There are a number of ways a plaintiff can collect their court judgments.
Judgments can appear on an individual’s credit report under the Fair Credit Reporting Act (FCRA). The amount of time it will appear on a credit report varies by state. Judgments are not reported directly to credit bureaus but they are documented in county court records. County court records are reviewed by credit bureaus. A judgment is treated as a negative action by the credit bureau and will lower an individual’s credit score.
One example of a judgment may be a default judgment. In a civil lawsuit, a defendant is required to file an answer to a complaint within thirty days. If the defendant fails to do so, a default judgment may be issued against them. A default judgment occurs without the court hearing the case and is an automatic win for the plaintiff.
What is a Dormant Judgment?
After the time frame defined in a jurisdiction, a judgment expires. After a judgment expires, it becomes dormant. This means the plaintiff or creditor has waited too long to take action to collect on the judgment.
Just because a judgment has lapsed, that does not mean it has gone away. Under the Fair Debt Collection Practices Act (FDCPA), a creditor may contact you and ask you to pay on the judgment. If a debt collector contacts you and gives false information about how old the judgment is, they may be violating the FDCPA. A creditor may also request the court revive the judgment so that action can be taken to satisfy the amount owed.
For example, if an individual leased an apartment for a year but only stayed a month, they may be liable for the rest of the year’s rent. In most cases, a lease can be terminated with notice as specified in the lease, but sometimes individuals do not follow those guidelines. The debtor has likely moved and did not appear for their hearing and the apartment complex received a default judgment.
The court may enter a judgment against the debtor for the eleven months of rent. If the apartment complex does not take any steps to collect their debt for several years, the judgment becomes dormant. The length of time varies by state. It may happen that after ten years, a new manager is hired and tries to collect old debts. That manager will have to petition the court to revive the debt.
What Happens When the Judgment Lapses?
After the judgment becomes dormant, or lapses, the plaintiff cannot collect on the judgment by any of the following methods:
- Wage garnishment;
- Seizing property;
- Seizing or garnishing money held in bank accounts; or
- Requiring the defendant to appear in a debtor’s examination hearing.
Just because a judgment lapses, does not mean it disappears. The debtor may still be obligated to pay what they owe at a later time. The plaintiff can also contact them and request that they pay their debt voluntarily.
Can The Plaintiff Revive the Debt?
Most states allow a revival of judgment. In most cases, the plaintiff has ten years from the date the judgment lapses to file a motion to revive the dormant judgment. Depending on the state, a judgment may be revived multiple times.
What Can I Do To Fight The Motion to Revive the Judgment?
If a defendant wishes to fight a revival of judgment, they can file an answer to the motion to revive. The answer should include a legal justification why the motion should not be allowed. The defendant usually has three legal defenses to a motion to revive:
- The statute of limitations has passed;
- The debt was paid in full; and/or
- The debt was settled as agreed upon.
What Does Vacate The Judgment Mean?
A defendant may file a motion to vacate a judgment. If a defendant files a motion to vacate, they are asking the court to withdraw the original judgment because of a legal reason. Reasons may include:
- A clerical mistake in the judgment;
- New evidence that justifies a new trial; and/or
- Fraud or misrepresentation by the plaintiff.
An example of a vacated judgment may occur if a default judgment was erroneously entered against a plaintiff who was not liable for the debt. This may occur when individuals have the same name. The incorrect plaintiff may notice a judgment on their credit report that they are not liable for. The court would then correct the judgment to be entered against the proper plaintiff. This is one reason reviewing your credit report periodically is important.
Do I Have Any Other Options to Avoid Having the Debt Revived?
One way to avoid having the debt revived is to file for bankruptcy. Bankruptcy is a legal proceeding which allows a debtor to eliminate debt or to set up a payment plan to pay off their debt over time. After a bankruptcy proceeding is completed, the debtor is no longer liable for the debts they incurred. The bankruptcy court will enter a discharge order which gives the individual a clean financial state. However, the bankruptcy can remain on their credit report for up to ten years.
Bankruptcy can have many long lasting consequences. It should only be used during a time of extreme financial hardship. There are many issues an individual should consider before choosing to file for bankruptcy.
Chapter 7 Bankruptcy, or “liquidation bankruptcy”, could be used by a defendant to discharge all legally dischargeable debts. There are rules about who qualifies, how to file and what type of debts that can be discharged. If a defendant has the means to pay off their debt, based on the previous six months of income, they are not eligible to file for Chapter 7 bankruptcy. It is important to consult with an attorney to make sure bankruptcy court rules are followed.
A second option is filing for Chapter 13 Bankruptcy. Also known as wage earner’s bankruptcy, Chapter 13 bankruptcy is a way for a borrower to restructure their debt and make affordable payments. Chapter 13 bankruptcy is usually for individuals with higher incomes who wish to keep their property. In this type of bankruptcy, some debts may be eligible for discharge. However, other types of debt may require payment in full through a payment plan, usually set for between three and five years.
Should I Talk to a Lawyer Regarding My Dormant Judgment?
If you have any questions regarding a dormant judgment, consult with an experienced civil lawyer. Your financial lawyer will help you evaluate your situation and will review your options to fight a judgment request. They will also advise you regarding filing for bankruptcy.