“Judgment debtor” is a term of art referring a party against whom a creditor obtained a judgment. I frequently get questions about lawsuits and judgments. Common questions includes:
- What happens if I ignore a lawsuit?
- Can I file for bankruptcy before or after judgment?
- Can I discharge a debt even after judgment has been entered?
- If there is a judgment, can they take my house?
Here is my general short answer.
The longer you wait, the more difficult it will be to fix your problems and the fewer your options will be.
How does the creditor get a Judgment?
First, let’s start with a basic scenario.
You owe Discover $15,000. You fall behind and at some point, Discover (or a debt collector) brings a lawsuit against you. A lawsuit is initiated by filing a summons and complaint with the county court. You must also be served with the summons and complaint. (In case you are wondering, in general, a “process server” will come to your home or work and hand you the summons and complaint.)
After you’ve been served, you have 30 days to respond to the complaint by filing an answer or attacking the complaint for defects. Let’s suppose you decide to ignore the lawsuit, and pretend that you didn’t see it. After the 30 days are up, Discover can move for a default judgment. The court will then enter or “order” a judgment against you.
What happens after the Judgment is entered?
Once Discover has the order in its hands, it can exercise several rights to satisfy its judgment. Most common methods include:
Wage garnishment - this is the most common. By law, your employer is required to withhold and remit up to 25% of your income.
- Judgment lien - Discover can also place a lien on your home or other property you own.
- Levy bank accounts
How do I fix this?
The short answer is that wage garnishments may be fixed in or outside of bankruptcy. A lawyer may be able to set aside the default judgment in State court and stop the wage garnishment. A judgment debtor can also request the wage garnishment amount be adjusted. But, ALL of this will cost you additional attorney fees and court costs.
If you do decide bankruptcy (either Chapter 7 or Chapter 13) is the way to go, we can also “avoid” a judicial lien. It may also be possible to get some of the garnished or levied funds returned in bankruptcy. But only for funds were taken within 90 days prior to filing your bankruptcy. Bankruptcy also had the added advantage of the Automatic Stay (we have a link to something for this?), which stops all collection activities including wage garnishment the moment you file for bankruptcy.
So, if you are facing a lawsuit or a judgment, it is time to get off the internet and get a good lawyer. I mean run, do not walk and get some help!
Image credit: Leo Reynolds
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