Court judgments may give creditors additional legal rights when recovering debts, but a creditor cannot simply file for a judgment. It must pursue the case in court by filing a lawsuit against the debtor and winning the case.
Significance
Any creditor that wants to use wage garnishment, a real estate lien or a bank account seizure to recover a debt must first obtain a court judgment. In addition to filing in the debtor's county court, the creditor must also send the debtor a summons and complaint notifying him of the impending case and granting him the opportunity to respond and appear in court with a defense.
Time Frame
Creditors cannot legally seek a judgment against a consumer if the debt collection statute of limitations, which dictates how long the debt is valid in a court of law, has expired in the debtor's state. If the creditor does so, the debtor must notify the court that the debt in question is out of statute. If she does not respond to the summons and does not appear in court, the judge will grant the creditor a judgment by default.
Considerations
Although creditors can sue for court judgments, not all do. A lawsuit is more likely on debts over $1,000. If a debtor raises a viable defense and disputes that he owes the debt, some creditors prefer to drop lawsuits rather than attempt to prove the debt's validity.
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