The legal system is complex and can be difficult to understand. It has a vocabulary all its own, and people usually don't use legal terms such as "judgment," "garnishment" and "levy" in their everyday language. If you've been sued, however, and a court has entered a civil judgment against you, you need to understand the legal terms associated with debt collection practices: The collection process can have a significant impact on your personal finances.
Entry of Judgment
There are various ways in which a court can enter a civil judgment against you. If you defend yourself in a civil lawsuit but a judge or jury nevertheless finds you liable for damages, the clerk of the court enter a judgment against you for the amount of damages. If you fail to appear in a civil case, a judge may enter a default judgment against you, and the clerk of the court enters judgment against you for the amount of the plaintiff's damages. Once the clerk enters judgment against you, your creditor can take various courses of action to enforce the judgment.
Enforcement of Judgment
The process for enforcing a civil judgment against you varies from state to state. Generally speaking, a creditor can garnish your wages or levy your assets. That means the creditor can "grab" funds in your checking account. In California, for example, a creditor must obtain a writ of execution from the court, prepare a notice of levy and prepare written instructions for the sheriff, marshal or process server to follow in serving the notice of levy. In California, if a creditor properly serves a notice of levy on the branch of your bank where your checking account is located, your bank must withhold funds from your checking account.
Exemptions
Your bank must send you a copy of any notice of levy it receives that affects your checking account. Again, the procedure for notifying you of the levy and the property you can claim as exempt from the levy varies depending on where you live. In California, for example, as of the time of publication, a debtor may ask the court to protect up to $6,075 if the debtor needs the money to operate a business that's her primary source of income. If you don't file a claim of exemption or if the judge denies your claim, your bank must pay the judgment from the money in your checking account, and your creditor receives the money.
Costs
Your judgment creditor can recover interest and costs in addition to the amount of the judgment. In California, as of the time of publication, interest accrued at 10 percent per year. The creditor may also collect costs such as the fee to issue the writ of execution and the fees the sheriff or process server charges to serve the notice of levy on your bank. The creditor is entitled to add these costs to the amount levied and to collect them from you.
Legal Advice
If a court has entered a civil judgment against you and you're concerned about protecting your assets from enforcement actions, you should consult a local attorney for advice specific to your state and your circumstances. You may be able to take other action, such as filing for bankruptcy, to protect your assets from creditors.
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