What is a Judgment and How Do I Stop One?

Edrie Pfeiffer
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Edrie Pfeiffer, Bankruptcy & Divorce Attorney

Remember when you purchased your car (or furniture, or house, or some other large piece of equipment/property)? You probably signed paperwork that had lots of tiny text and paragraphs with numbers that you glanced over but didn't actually read. This paperwork most likely included your agreement with the creditor who was lending you the money to make that purchase. The agreement included terms, like how much your monthly payment would be, the date each month you would make that payment, and what would happen if you stopped making those payments or did not follow the exact "rules" of the agreement. Banks and other lenders take those agreements very seriously, and they can start making your life very stressful if you fail to follow their rules. Next thing you know, you receive notice that a judgment was filed against you. But what exactly does that mean?? Is there a way to stop the judgment?    what is a judgment?          

What is a Judgment? If you fail to make the payments to a creditor according to the terms of your agreement, the creditor can file a Motion for Judgment (also called a Warrant in Debt) in State Court. They have the right to do this even if you are making partial payments or if the debt is secured by a car or furniture. At the hearing, the Judge will make a decision if you owe the creditor the money that they are claiming you owe.  Most of the time, the person being sued (you) does not show up for the hearing, so the creditor wins by default. If the Judge determines that you owe the money or if you don’t show up for the hearing, the Judge will enter an Order called a Judgment. The Judgment is simply the Judge declaring that you legally owe the creditor the money.

 What happens now? Once a creditor gets a judgment against you, they can attempt to collect from you involuntarily. They do this through the garnishment process. The creditor has to wait 10 calendar days after the judgment has been entered before they can file for the garnishment. If the creditor knows where you work, they can send the garnishment summons to your employer. If they know where you bank, they can send the garnishment summons to your bank. Even worse, they can do both at the same time! If the garnishment summons is sent to your employer, your employer must withhold 25% of your after tax income for the garnishment period (unless you make less-than a set amount). If the garnishment is sent to the bank, the bank must freeze all money currently in the bank AND any money that is deposited into the bank during the garnishment period, up to the amount of judgment with a few exceptions.

So what happens if I get a Garnishment Summons? The hearing date on the garnishment summons is not the date for the garnishment to begin, but is the date that the creditor may go into Court and pick up the money that has been collected for them. If the judgment order that you originally received was entered in General District Court, the creditor may collect on a garnishment for 10 years after the judgment has been entered, and they can renew it for another 10 years! If the judgment was entered in a Circuit Court, the creditor may collect on it for 20 years. That's a very long time to be losing significant amounts of your paycheck. late payment due

Do not panic! The biggest mistake you can make is to ignore the original judgment notice. Call an experienced bankruptcy attorney the day you receive that notice, or suspect that a creditor might have entered a judgment against you (use your common sense here... if you have not paid a bill, or paid less than the amount you needed to pay, a judgment might be coming). Taking immediate action with an attorney is the quickest way to stop a judgment or garnishment before it starts cutting into your finances.