Sometimes people run into a situation where they get a judgment against them in a court of law and cannot pay the judgment or do not want to pay the judgment. No matter what the circumstances, if you have a judgment entered against you, you need to know what will happen when the creditor (the winner) tries to collect the judgment against you.
Key Takeaways
The Money Judgment
Regardless of the circumstances, if you get a judgment entered against you, typically referred to as a money judgment, the winner in the lawsuit will have to take steps to collect that money judgment. In some rare instances, the debtor (the loser) will be able to just pay the money judgment right away, and the judgment will then be satisfied.
Real Property or Personal Property
What is the difference between real property and personal property? Real property refers to real estate, either a home or a plot of land and whatever is “attached” to it. Personal property is things that you own that are moveable, like your jewelry or your car.
Lien on Real Property
If there is a judgment entered against you and it is not satisfied, some jurisdictions allow for a lien to be filed on any real property you own in that state. When a lien is placed on your real property, you have to satisfy the lien prior to transferring the property. While you don’t have to pay the lien right away, if you ever want to sell your house or your land, you will have to pay the lien holder in order to do so.
Can My House Be Seized By A Creditor?
Only in foreclosure cases can the creditor, the lender bank, seize your home and sell it at a foreclosure sale in order to recoup their loan. To repeat, only a lender bank who holds a mortgage on your home can move to seize it, no other creditor can take your home unless you use your home as collateral for a loan. An example would be if you owe a great deal of credit card debt, the creditor cannot try and take your home from you.
What Personal Property Can Be Seized In A Judgement?
The most common approach by the judgment holder is to attempt to garnish your wages. After filing the appropriate court paperwork, the creditor can contact your employer or your employer’s payroll department to garnish your wages. The judgment holder has to hold the amount garnished to a certain percentage, though they cannot take your whole paycheck via garnishment. The garnishee is notified of the attempt to garnish and is allowed to contest it. The judgment creditor can also search for the existence of any bank accounts in your name and levy the bank account, which means they can make a legal withdrawal of the funds in this account.
Debtor’s Exam or Supplemental Exam
If the judgment holder has a difficult time identifying your assets, they can order you to cooperate with a debtor’s exam, where they require you to answer a series of questions about your assets in order to identify the means to collect on a judgment. Failure to appear and cooperate in a debtor’s exam could mean sanctions and even jail time in extreme cases, depending on jurisdiction.
What Assets Cannot Be Seized In A Judgement?
Some personal property is protected from seizure by a judgment creditor. Medical equipment, the tools you use for work (they enable you to earn an income), personal property under $1000 in value, your home appliances, etc., your clothing, one cell phone, one television set, and one computer are all exempt from seizure.
Ideal Approach
If a judgment has been entered against you and you have no recourse, it is best to try to negotiate a payment plan with the person who got the judgment against you. Trying to fight collection will cause you a great deal of unnecessary stress. Depending on the amount of the judgment and the tenacity of the judgment creditor, it could mean years of intrusive and financially draining legal actions if they stop at nothing to collect. Getting the judgment means that the law is on their side in this matter, and it would be best to find a way to pay it and move on with your life.
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