When a creditor takes you to civil court for a debt and you lose the case, the judge awards a judgment against you. The judgment orders you to pay the creditor what's owed, in addition to court costs and filing fees. Certain states, including Tennessee, allow you to file a slow-pay motion to reduce the monthly amount you have to give the creditor.
The Hearing
A judgment against you is a court order to pay a debt. Ignoring the order to pay can created additional legal problems. The creditor can have you ordered back into court to answer specific questions about your finances, income and assets and to answer questions about why you haven't paid the judgment. In addition, ignoring the asset hearing court date can lead to your arrest for failing to appear when ordered.
Financial Problems
Often, by the time a creditor gets a judgment against you, your financial issues are pretty significant. Whether you lost a job, got caught in an economic downturn or simply took on more debt than you can comfortably pay, a court-ordered judgment commands you to produce the money for the debt. As you begin to rebuild and dig your way out of your financial problems, the judgment hanging over your head can cause stress.
Slow Pay
Certain states have a slow-pay provision for civil judgments. A slow pay is filed in the same court where the judgment was granted. There's typically a nominal filing fee for the slow-pay motion, and you're given a court date. You need to bring evidence of your need to pay a reduced monthly amount. Such evidence can include bank statements, paycheck stubs and proof of paid living expenses. You explain to the judge why you're requesting a slow-pay order and show the proof of your financial situation. If the judge grants your request, the slow-pay order is filed in the court clerk's office, allowing you to reduce your payments to the creditor by the amount so ordered. This extends the length of time you pay off the debt, but as soon as you become more financially stable, you can always double up on the payments and get back on track. The Fair Debt Collection website lists which states allow slow pays, income exemptions and other rules regarding debt collections.
Work With Creditors
Just because a creditor gets a judgment against you doesn't mean the creditor won't work with you to pay the debt. Call or write to the creditor and request reduced payments. Be sure to acknowledge the debt, court date, case number, your name and the total amount you're ordered to pay. Honesty about your financial situation with a request to temporarily cut the payments in half should be included in the communication. Be sure to get the name and position of whomever you speak with as future evidence that an agreement was reached. Offering to pay as ordered as soon as you can might help the creditor work with you in the meantime.
Relative Help
If your state doesn't have a slow-pay provision and the creditor refuses to work with you on reduced payments, approach relatives for a loan. Judgments often come with interest attached, which means every month you don't make a payment, the size of the judgment increases. Borrowing what you need from a relative to pay the judgment in full and then make timely interest-free payments to repay your relative saves you money in the long run.
Exempt Income
If you're a Vermont resident, you can have your income declared exempt if you can show in court that your income is entirely used for daily living expenses. The expenses must be reasonable and can include support for your legal dependents.
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