Paying Off Civil Judgments

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 What Is a Civil Judgment?

When a plaintiff files a complaint with the court, a lawsuit is started. Depending on how the lawsuit progresses, the plaintiff may win. If this occurs, the defendant is served with a civil judgment. A defendant may choose to reimburse the money to avoid wage garnishment.

What Happens If a Judgment Is Issued Against You?

A judgment can turn an otherwise uncollectible old credit account into a sum of money that can be easily collected.

For example, suppose a creditor files a lawsuit against you, hoping you will ignore it and fail to appear in court or lose the case.

In that case, the creditor will have options such as garnishing your wages, attaching your bank account, seizing your property, and following up with post-judgment discovery, which seeks detailed information about your personal finances.

Can I Make Recurring Payments to the Court?

No. A defendant who wishes to make recurring payments must directly arrange with the creditor.

Can I Make the Payment to the Court Directly?

Yes. The action was filed in a court that accepts judgment payments. However, a defendant may still be required to contact the creditor’s attorney first.

Post-judgment interest is allowed in some cases. The defendant must contact the creditor’s attorney to obtain the post-judgment interest amount.

How to Deal with a Default Judgment

Default judgments occur when you fail to reply to a lawsuit, usually from a debt collector, and a judge settles the matter without hearing your side of the story. You were found guilty because you never filed a defense.

Because of how quickly they can occur, default judgments are frequently referred to as “automatic judgments.” Wage garnishment or a bank account levy, which permits a creditor to take money from your bank accounts to satisfy the obligation, could follow.

Here’s what you should do if you receive notice of a default judgment or garnishment.

Obtain Information

Before a lawsuit, the debt collection process may take several years. Debt may be sold and resold from collector to collector, and mistakes may occur. You should double-check that the judgment order is for a debt you genuinely owe and in the exact amount.

Gather all available information, including:

  • Bills issued by the original creditor
  • Debt collector notices, such as the validation letter
  • Any court documentation you may have received

The debt collector may have violated your consumer rights if you did not receive collection notices or were not served with a court summons prior to the lawsuit. You may have reasons to appeal the decision. Continue reading to learn how.

Seek Legal Advice

Next, look for legal assistance in your area. Many lawyers provide free or low-cost services.

A lawyer can help you determine whether the decision is valid and, if so, go over your choices. If the judgment is erroneous, your lawyer can advise you on how to appeal it.

Determine Your Next Steps

To cope with a default decision, you have four major options:

  1. Accept the verdict
  2. Accept a lower judgment
  3. Contest the decision
  4. Pursue debt relief
  5. Accept the verdict

If you owe the money, your best bet is to accept the verdict. You can pay the creditor in one lump sum if you have enough money.

You’ll almost certainly face wage garnishment or a bank levy if you can’t. A nonprofit credit counselor can assist you in examining your finances to determine how much you can afford.

In the garnishment procedure, you do have rights. You must be officially notified of the garnishment, and you have the right to file a dispute if the notice contains incorrect information.

Some types of income are exempt, such as Social Security. A garnishment order might be challenged if your rights have been violated or if it would prevent you from affording basic requirements.

Make a Decision

A creditor may agree to settle the judgment for a lower amount than you owe. This usually occurs when the creditor believes you will file for bankruptcy and discharge the obligation in that manner.

Settling can be a win-win situation. The creditor receives at least partial payment for the obligation, albeit it is normally required in a lump sum. You pay less and avoid wage garnishment for an extended period of time. The creditor will petition the court for “satisfaction of judgment.”

Make a written agreement stating how much you will pay and when you will pay it, and the payment will cover the entire amount. An experienced consumer attorney can assist you in reaching a successful settlement.

Contesting the Decision

If a default judgment was rendered in error, you might be able to have it vacated or set aside. If you never owed the amount, were not advised of the lawsuit, or the case was mismanaged, you may be able to do so.

Consult with a legal counsel and respond as soon as you are aware of the judgment.

If you were aware of the case but did not reply, you have six months to argue “excusable neglect.” You can give examples such as illness or travel. If you were unaware of the suit, you have up to two years to file a challenge.

Because state laws differ, seek legal advice. Challenging a decision requires time and effort, but it can pay off.

The matter can be dismissed or reopened, but if the case is reopened, there will be no judgment. It’s as if the case is starting over, but the person now has an opportunity to defend themselves.

Pursuing Debt Relief

If you see no other way to deal with the default judgment order, you may wish to consider filing for bankruptcy. Consult a bankruptcy lawyer to discover if it is a viable choice for you.

Take action right away. The judgment and enforcement actions will be suspended if you declare bankruptcy.

What Assets or Funds Can the Judgment Creditor Seize from the Judgment Debtor to Satisfy the Judgment?

The judgment creditor cannot take certain property connected to fundamental requirements. This is known as “exempt” property.

The family car might be one example of such exempt property.

What Is Post-Judgment Interest?

The amount of money accrued after the judgment is put into court records is considered post-judgment interest. The proportion varies depending on the jurisdiction. The interest will continue to accrue until the judgment is satisfied.

Creditors might ask that post-judgment interest be applied to the initial judgment amount. For example, suppose a creditor obtains a $600 judgment and requests post-judgment interest. If the post-judgment interest rate is 3%, the defendant owes $600 plus the 3% post-judgment interest.

Is it Possible to Avoid Paying Post-Judgment Interest?

Negotiating with the creditor allows a defendant to avoid paying post-judgment interest. Once the judgment has been paid, the creditor is responsible for notifying the court.

Can I Declare Bankruptcy to Avoid Having to Repay My Creditors?

A defendant can file bankruptcy to avoid paying the judgment or judgment interest, despite several restrictions.

What Happens If the Creditor’s Attorney Refuses to Inform Me of the Interest Amount?

Speak with an attorney about paying the judgment and calculating the post-judgment interest. The attorney may be able to negotiate on your behalf or file for bankruptcy on your behalf.

You should consult with a civil lawyer if you have been sued or a judgment has been obtained against you. You may also be able to reach an agreement or compromise with the creditor or debt collector before a court issues a judgment.

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