Can They Take Money Out of Your Bank Account in a Judgment of a Lawsuit?

Judgments and lawsuits are typically the end of a long process of collections. If you don't pay a debt you owe, your creditor will usually contact you repeatedly in an effort to get a payment out of you. If you don't pay, your creditor may eventually sue you in court. If the court agrees with the creditor's claims, it will grant a judgment, authorizing the creditor to garnishee your wages or possibly attach your bank account.

What Is A Judgment?

If you don't pay your debts, a judgment issued by a court will authorize your creditor to take physical action to collect on the outstanding debt. Although each state determines how long a judgment can be enforced, judgments typically last as long as 10 years, and creditors generally have the right to renew judgments for an additional 10 years. As a result, if you have a judgment against you, you must usually find a way to pay it off, as it can follow you for decades.

Wage Garnishment

The typical result of a judgment is wage garnishment. A judgment allows a creditor to apply for wage garnishment directly from your employer, with enforcement usually coming from the local sheriff's office. Although the actual act of garnishing your wages usually takes an additional step on the part of the creditor, most creditors that win a lawsuit have the right to pursue up to 25 percent of your wages in this manner. In some states, laws protect your wages from garnishment, in which case your creditor may turn to alternative forms of collection in order to secure payment on an outstanding debt.

Asset Attachment

Whether or not a creditor is able to garnishee your wages, they may also pursue your assets in a bank account through asset attachment. Depending on the laws in your state, a creditor may come in and sweep out all of the money in your bank account, particularly if there is no other available option for payment. Certain types of money, such as Social Security payments, are exempt from attachment, but in order to protect these funds, you usually need to file paperwork with the court and attend a hearing.

Satisfaction of a Judgment

Usually, you can satisfy a judgment in two ways. Your primary options are to pay off the judgment amount or to file bankruptcy. Although you may be able to negotiate with your creditor and settle the judgment for a lesser amount, many creditors will not negotiate with a judgment in hand. Since your creditor has the backing of the court to collect the money you owe, your creditor has little incentive to settle for a lesser amount. If you file bankruptcy, your creditor must stop collections activity immediately. If you receive a bankruptcy discharge, you can usually get the judgment against you dismissed.