Failing to pay outstanding credit cards, medical bills or other debts leaves you open to collection actions from your creditors, including filing a civil lawsuit. If a judgment is entered against you, your creditor is then free to take additional steps to attach your assets. If a creditor is threatening to sue, learn what it means to have an outstanding judgment against you and how to deal with it.
Obtaining a Judgment
To seek a judgment, your creditor must first file a lawsuit in the appropriate court. Depending on the amount of the debt and the laws in your state, the suit may be filed in small claims court, circuit court or superior court. You will receive a summons, which includes the creditor's name, the amount of the suit and your court date. You must answer the summons prior to the court date. Failure to appear in court will result in a summary judgment being entered against you.
Collecting a Judgment
Once a judgment is entered against you, the creditor must take additional steps in order to collect what is owed. The two most common methods for doing so are wage garnishment and/or garnishment of your bank accounts. As of July 2011, wage garnishment for creditor lawsuits was not permitted in Texas, Pennsylvania, North Carolina or South Carolina. The laws regarding bank account garnishment vary from state to state. In order to attach your wages or bank account, the creditor must file a notice of garnishment with the court. The court must then notify your employer and your bank of the garnishment order. Your employer must begin garnishing your wages immediately while your bank is required to turn over your assets to the court after a specified holding period.
Exempt Assets
Federal law protects certain types of deposits from bank account garnishment. If you're served with a garnishment order, you must notify the court of these exempt assets. Available exemptions include Social Security benefits, veterans benefits, retired railroad workers' benefits, unemployment payments, workers' compensation, military survivors' benefits, Supplemental Security Income benefits, student aid, federal disability and retirement benefits, benefits paid for the disability, detainment or death of U.S. workers employed in a foreign war zone, foreign service disability and retirement benefits and Federal Emergency Management Agency disaster relief benefits.
Reversing a Judgment
If you feel that a judgment was entered against you in error, you can attempt to have it reversed. You must file a motion to vacate the judgment with the court that issued it. In your motion, you must provide a reason as to why you feel the judgment is incorrect. The court will schedule a hearing to allow you to present your argument as to why the judgment should be vacated. If the court affirms the original judgment, you may appeal to the creditor directly to lift the garnishment order and allow you to negotiate a private payment plan.
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