Credit Judgment Laws

Credit judgment laws refer to those procedures established by each state that permit a judgment holder to obtain satisfaction for his judgment for monetary damages. Each jurisdiction has certain authorized collection procedures that aid a judgment holder in enforcing his judgment. The most common post-judgment collection procedures are wage garnishment, attaching the assets in a debtor's bank account and placing a lien on a debtor's real property.

Obtaining a Judgment

Before a creditor can use the authorized enforcement procedures against a debtor to collect any sums due, he must obtain a judgment from a court. Once a plaintiff/creditor prevails in his lawsuit against a defendant/debtor, the court enters a judgment on its docket for the amount of damages awarded. For purposes of commencing collection procedures, as soon as the court issues judgment in his favor, the plaintiff is characterized as a judgment creditor and the defendant, the judgment debtor.

Execution

In most states, before a judgment creditor can initiate any authorized collection procedures against the judgment debtor, he must request that the court issue an Execution on the judgment. An Execution is an official document that bears the seal of the court that issued the judgment and states that the judgment creditor is entitled to collect the damages stated therein. Once he obtains an Execution, a judgment creditor can "levy on the Execution" or commence post-judgment collection procedures authorized by law.

Enforcement Procedures

A judgment creditor can apply to the court for a writ of garnishment. The garnishment order instructs the employer of the judgment debtor to set aside an amount of wages designated by the court for the benefit of the judgment creditor. In most states, the writ of garnishment must be obtained for each successive pay period. A judgment creditor may also seek to obtain a lien against the real property of the debtor for the full amount of the judgment. The lien acts as a cloud on the title of the property and must be dissolved before the property can be freely transferred

Duration of Judgment

A judgment is valid for a specified period established by each particular state. The limitations periods on judgments can range from five years to 20 years. Once the limitations period for the judgment has expired, all writs of garnishment and attachment and any court orders issued to aid the judgment creditor in collecting on the judgment are dissolved. Most jurisdictions allow a creditor to renew the original judgment prior to its expiration date, however. Renewal periods vary by state, but typically a renewal is for the same period as the duration of the original judgment.