Civil judgments are damaging to your credit and can lead to bank garnishment and even bankruptcy if not resolved. Civil judgments, also called monetary judgments, are legal documents signed by a judge. The judgment orders you to pay a specific amount of money as damages stemming from a civil lawsuit over credit card debt or some other dispute. A judgment from a credit card lawsuit requires you to pay the full balance owed plus court and attorney's costs.
Default Judgments
Some people receive so-called "default judgments" after failing to appear in court to defend themselves. Judgments are possible only after a lawsuit is heard in court. If the person sued does not show for the court hearing the judge automatically grants a judgment to the party filing suit, called the plaintiff. The New York Times reports that some people learn about judgments only after discovering that their bank accounts are frozen because of garnishment.
Enforcement
Garnishment is the biggest problem stemming from a civil judgment. The party winning the lawsuit can ask the judge for permission to garnish your bank accounts if you do not pay the amount listed in the judgment. The judge may give you some time to work out a payment plan, but at some point must allow enforcement of the judgment. Garnishment is a popular choice for collecting on judgments.
Frozen Account
Garnishment allows the debt collector to make regular withdrawals from your bank account. Usually the checking account is garnished, but withdrawals from other accounts is possible. Checking accounts are popular for garnishment because your checking account information is often on file because of previous payments before the account was closed and a lawsuit filed. The account is frozen once the judge signs the garnishment order and a copy of the legal order is delivered to your bank or credit union.
No Access
You are prohibited from accessing the garnished account except to make deposits. Checks written are returned unpaid and use of your debit card for making purchases, payments or withdrawals is placed on hold. Meanwhile, the party with the garnishment order can freely withdraw money in a lump sum or through installments until the judgment is paid in full.
Bankruptcy
Some people suffering from garnishment file for bankruptcy. Bankruptcy stops garnishment immediately, but also ruins credit. A legal injunction in bankruptcy called "the automatic stay" forces banks to stop garnishment and reopen your account. Garnishment can resume if you fail to complete the bankruptcy or it is dismissed by the bankruptcy court because of procedural errors.
Settlement
Debt settlement also ends garnishment if the party collecting agrees. Debt settlement usually allows the paying off of delinquent accounts for less than the full amount due. However, discounts usually are not possible when the debt collector has a judgment and a garnishment order against you.
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