A creditor who receives a judgment against a debtor is given many legal rights to recover any money owed. A debtor should understand what a judgment is and what to expect once a creditor has a judgment. A debtor should avoid a judgment if at all possible to prevent future garnishments or liens placed against him.
What Is a Judgment?
Creditors have the legal right to go to court and request a judgment if a debtor has failed to repay money owed. A judgment is a court order, signed by a judge, that allows the creditor to collect owed money using legal methods such as garnishment or liens. A judgment is only granted if the creditor goes to court and can show the judge that the debtor has failed to pay his debt. A debtor has the right to be in court and defend his position.
Preventing a Judgment
Avoiding a judgment is in your best interest. Once a judgment is granted, it is very hard to negotiate with a creditor. The creditor has the judgment and therefore has the legal power to garnish your wages or place a lien. He knows he has a good chance of recovering the entire amount owed. Prior to a judgment being granted, you may be able to work out a payment plan or settlement with the creditor. Check your state laws on statute of limitations on debt. Once the statute of limitations has passed, a creditor can be denied a judgment. As the debtor, you would appear in court and inform the judge that the statute of limitations has passed, and the judge will dismiss the case.
Liens
Liens are placed against your property, such as your home, vehicle or other type of property with high value. The lien requires the debt be paid out of any proceeds when the property is sold; the lien is paid before you receive any proceeds from the sale. A lien does not expire and will continue to accrue interest until paid. A lien is placed by the creditor who has the judgment and the lien is often filed through the clerk of the court office.
Garnishments
A creditor with a judgment is able to garnish a portion of your wages or can garnish funds from your bank accounts. When a creditor contacts your employer with the judgment, your employer is required, by law, to transfer a portion of your wages directly to the creditor. A bank must withdraw all the funds in your bank account and you will not receive prior notice. If the funds in your account are exempt from garnishment -- such as child support money and disability payments - you will have to deal with the creditor to have the funds returned to your account. This involves proving the funds were exempt.
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