What happens when you have a judgment against you?

If a default judgment is issued against you, you may be able to have the judgment vacated or set aside. In order to vacate a judgment against you in most states, you must show that you were not properly served with the lawsuit, that you were unaware of the suit against you, or that you knew about the suit but had an excuse for failing to respond.

Each state has different requirements for vacating the judgment, and a different time limit for doing so. Generally, you should not attempt to vacate or set aside a judgment without the assistance of a lawyer.

If you win your motion to set aside the judgment, you will have an opportunity to answer the lawsuit and to litigate or settle the case, possibly for less than the original judgment against you.

If vacating the judgment is not an option, you must then address the judgment by: 1) paying the judgment creditor in full; 2) entering into a settlement or payment plan with the judgment creditor; or 3) getting the judgment discharged by filing for bankruptcy.

Ignoring a judgment, or simply refusing to pay it, are not viable options. Judgment creditors have many tools at their disposal to obtain payment from you.

In most states, a judgment lasts for 10 years, and in many of those states, it can be renewed for an additional 10 years after that. A judgment can act as a lien against any real estate you own in the state in which the judgment was issued, and in any other state where the judgment has been filed as a foreign judgment. As a result, you won’t be able to sell your home or other property you own without first paying off the lien, or the lien amount will be taken out of the proceeds of the sale, reducing the amount you receive from the sale.

In addition to a lien on real property, your state may allow a judgment creditor to file a levy with your employer and garnish your wages to pay the judgment amount. If a levy is filed, your employer will be required to deduct a certain percentage of your salary from each paycheck to pay to the judgment creditor until the judgment amount is satisfied. There may be a cap on the percentage of your income that can be garnished, but even with the cap, the amount could represent a sizable chunk of your wages – up to 25% of your net income in many states.

Judgments can also be levied directly against your bank accounts or other assets. When the paperwork is filed with your bank, the bank may be required to take some or all of the judgment amount directly from your bank account to pay to the judgment creditor. The judgment creditor can also take the levy to the local sheriff or other law enforcement official and ask them to execute it against any property you hold in the jurisdiction. This can include your car or other assets that the judgment creditor can sell to satisfy the judgment.

Certain assets and property are exempt from garnishment or attachment by a judgment creditor, but each state has its own rules about what is exempt. When you receive a notice of garnishment, most states will allow you to object, and a hearing will be held on whether your wages or property can be garnished to satisfy the judgment.

In addition to all of the ways a judgment creditor can obtain payment on a judgment against you, judgments can be problematic in other ways. Once a judgment is filed, it becomes a public record, and you can lose your driver’s license or other professional licenses, depending on what the judgment is for. Judgments can also damage your credit, prevent you from obtaining insurance or renting an apartment, and might even prevent you from getting security clearance or passing a background check, which could prevent you from obtaining a job.

If you have received notice that a judgment has been filed against you, use our site to connect with a bankruptcy or creditors’ rights lawyer who can help you vacate the judgment, negotiate satisfactory terms for payment of the judgment, or, if necessary, file for bankruptcy.