What to Do When You Receive Judgment Papers From a Creditor?

When you stop making payments to a creditor, it has the right to sue you in an effort to collect your outstanding balance. If the creditor is an agency of the federal or state government, such as the U.S. Department of Education, IRS or a state treasury department, these agencies do not have to file a suit against you before they can begin garnishing your wages, state income tax refund and federal income tax refund.

Lawsuit

When you receive the lawsuit paperwork notifying you of a creditor's lawsuit, you may still have some options to avoid court and possible wage garnishment. You can contact the creditor or law firm listed on the lawsuit paper work and try to negotiate a settlement agreement. Often times, creditors will allow you to settle your account for less than the full balance, but they may demand that you pay the settlement amount in full. You can also try to negotiate a monthly payment arrangement. Negotiating and accepting settlements and payment arrangements is at the creditor's discretion. They have no legal obligation to work out any sort of arrangement with you.

The Judgment

When you receive a judgment for a debt, it is from the court and not the creditors. The papers will list the name of the creditor, the amount of debt you owe and the judge's final decision. A final judgment in favor of the creditor means the judge is allowing them to begin garnishing your wages as a means of collecting on the balance you owe. Generally, the only thing you can do to stop the garnishment at this point is to pay off your outstanding balance in full.

Filing a Motion to Quash

After you receive a judgment, you have the right to file a Motion to Quash a Writ of Garnishment. By doing so, you are asking the judge to dismiss the case and void the creditor's writ of garnishment. You should consider filing a motion to quash if the creditor did not properly serve you with the lawsuit papers. Courts refer to this as lack of jurisdiction. You may also file a motion to quash if you can prove that the debt does not belong to you, such as in the case of identity theft. However, if you are a victim of identity theft, you need to file a police report if you haven't already. A judge may ask you to present a copy of the police report in court.

Filing a Claim of Exemption

Income that is exempt from private creditor garnishment includes regular Social Security payments, worker's compensation benefits, disability payments and unemployment benefits. The above-listed type of income is not exempt from state and federal agency debt. If you make income that is less than 30 times the federal minimum wage, it is exempt from garnishment for state debts, federal debts and private creditors. To calculate 30 times the federal minimum wage, multiply the current minimum wage by 30.