What if You Don't Have a Job and Owe a Judgment?

When a debtor owes money to a creditor and falls behind on repayment, the creditor may choose to file a claim in civil court seeking repayment of the money. If the judge rules in the creditor's favor, then a civil judgment is issued against the debtor, meaning that he is legally obligated to make good on his debt. Debtors who are unemployed may be struck particularly hard by civil judgments, leaving them with an unpalatable set of options.

Negotiation

If an individual with no income is ordered to pay a debt to a creditor, he may wish to attempt to get the creditor to agree to accept less money than is owed. In many cases, the creditor will be willing to accept partial payment of the credit over full payment, particularly if he believes that the debtor is legitimately unable to pay back the debt. Explaining to the creditor may improve the debtor's chances of receiving a debt reduction.

Consolidation

If the debtor cannot secure a reduction, he may be able to consolidate his debts or work out an alternate payment plan. In debt consolidation, a third party purchases all of the debtor's debt and repays it; in return, the debtor agrees to pay the third party under alternate terms, such as over a longer period of time or for a lower rate of interest. Sometimes, debtors can negotiate alternate methods of payment directly with creditors.

Bankruptcy

If person has no income and a significant number of outstanding debts, the person may find it in her interest to declare bankruptcy, which will absolve her of a number of her debt obligations. In a Chapter 7 bankruptcy, known as a liquidation bankruptcy, a person will give up a number of assets in return for being freed of most of his debts. In a Chapter 13 bankruptcy, a debtor submits to a reorganization of his finances and an alternate payment plan.

Collection Actions

If a person who has an outstanding civil judgment chooses to do nothing, the creditor may choose from a number of different tactics to collect payment of the money. Although the creditor cannot garnish the wages of a person who has no job, he may be able to freeze the debtor's bank account. Similarly, the creditor may be able to place liens on the debtor's property. However, some states prohibit creditors from taking such measures against low-income people.