If you lose a debt lawsuit, the creditor is awarded a judgment against you. This allows them to take additional measures to recoup their money if you don’t pay. So you might wonder: What happens if a defendant does not pay a judgment?
Ignoring a judgment is not a good idea. But if you have a judgment against you, there are options to resolve your situation. So read on to learn what happens if a defendant does not pay a judgment and what you should do in this situation.
What Is a Judgment in a Debt Lawsuit?
A judgment is a decision made by a court regarding the claims in a lawsuit. If the court finds that you owe a certain amount of money to a creditor, the court will issue a judgment in favor of the creditor. This judgment is essentially a legal confirmation that the debt is valid and enforceable.
Once a judgment is obtained, the creditor has more tools to collect the debt if you don’t voluntarily pay the amount stated in the judgment.
On the other hand, if the court doesn’t find in favor of the creditor, then the lawsuit is typically dismissed. At that point, you’re no longer legally required to pay the claimed amount. However, this doesn’t necessarily mean that the debt isn’t valid. It just means the creditor hasn’t met the legal requirements to prove the debt in court.
Types of Judgments
Judgments typically fall into one of the following categories:
Default Judgment
If you fail to respond to the lawsuit or don’t appear in court, the court may grant a default judgment in favor of the plaintiff (the creditor). This means the court accepts the plaintiff’s claims as true since you didn’t dispute them.
Summary Judgment
A summary judgment can be granted if the facts of the case are undisputed and the judge determines that the plaintiff is entitled to win as a matter of law. This can happen even if you answer and acknowledge the debt but argue it shouldn’t be paid for some reason. A summary judgment could be granted if the judge doesn’t accept your argument or you do not have a legal basis for a valid defense.
Vacated Judgment
After you have a judgment against you, you might have the option to file a motion in court to have a judgment vacated. You must show a valid reason why the original judgment should not stand. For instance, you weren’t properly served with the lawsuit, or if you can show there was a procedural error in the original filing.
Consent Judgment
If you agree you owe the debt and are willing to make a payment plan, the creditor might agree to a consent judgment. This legally enforceable agreement allows you to avoid further legal proceedings.
Stipulated judgment
This is an agreement between the parties in a lawsuit that settles the dispute and is sanctioned by the court. The parties involved agree on the outcome, and the judge enters the agreement into the court record as a judgment.
Satisfied Judgment
Once a judgment debt has been fully paid, it becomes a satisfied judgment. This should be officially noted in the court records. It’s important for you to ensure this happens, as it impacts your credit record.
Unsatisfied Judgment
This refers to a judgment debt that has not been fully paid.
What Happens if a Defendant Does Not Pay a Judgment?
If the defendant in a debt lawsuit (AKA the “judgment debtor”), doesn’t voluntarily pay a judgment, the plaintiff (creditor) has options to try and collect the debt. This could vary depending on what state the judgment was entered in and where the defendant lives:
- Wage garnishment. The creditor may be able to have part of the defendant’s wages garnished. Money is directly deducted from your paycheck until the debt is paid.
- Bank account levy. The creditor could levy your bank account, meaning they could take money directly from the account to satisfy the debt. Generally, there is no notice ahead of a bank account getting frozen.
- Property lien. The creditor can often place a lien on your property, such as a house or car. The lien must usually be paid off before you can sell the property.
- Seize assets. Sometimes, a creditor can get a court order to seize other assets or personal property you own, such as a vehicle or real estate, to satisfy the debt.
It’s important to note that not all of these collection methods are available in all jurisdictions. There may also be exemptions for some types of income and assets. For example, Social Security income, disability benefits, child support, and retirement income are typically exempt from wage garnishment.
If you consistently fail to pay a judgment, the court may find you in contempt, which could result in additional fines or jail time. However, this is usually a last resort and varies widely by jurisdiction.
Finally, a credit-related judgment can significantly impact your credit score. That can make it more difficult to obtain credit or loans in the future. Judgments also become part of public records, so anyone doing a background check can see it.
What Happens When a Defendant Does Pay?
Once the debtor pays the full amount owed according to the judgment, a few things should happen.
First, the creditor should provide the defendant with a receipt or written confirmation that they received the payment. Then the creditor is typically responsible for filing a “satisfaction of judgment” form with the court. This document serves as proof that the judgment has been paid in full. It’s important for the debtor to make sure this happens, as it’s the official record showing that they met their obligation.
Paid judgments should also be reported to the credit bureaus so that they can update the debtor’s credit report to show that the debt has been satisfied. However, the debt will generally stay on the credit report for seven years.
Finally, if the judgment led to a lien on the debtor’s property, the creditor should also arrange for the lien to be released once the debt is paid. The debtor should ensure this is done so they can sell or refinance their property without issues.
If the creditor doesn’t follow through with these steps, the debtor may need to go back to court or take other action to get the satisfaction of the judgment recorded and the lien released. It can be helpful to consult with a debt relief lawyer to understand the specific procedures in the jurisdiction where the judgment was entered.
Get Legal Help With a Judgment
Facing a judgment can be stressful. Having a debt help lawyer on your side can provide peace of mind that you’re taking all the right steps and not missing anything important. An experienced debt-help lawyer can offer valuable legal advice. They’ll help you understand the legal jargon, the court process, and your rights and obligations under the law. Plus, they could help you identify potential legal strategies or defenses you might not know. Sometimes, a debt settlement lawyer can negotiate a debt settlement or other agreement that avoids court.
If you’re facing a debt lawsuit or already have a judgment against you, contact the financial law firm Tayne Law Group. We offer a free phone consultation so you can learn more about how we work and your options related to outstanding debt or judgments.
Tayne Law has decades of experience dealing with the debt collection industry, collection law firms, collection lawsuits, and debt resolution options. We have helped clients protect their legal rights and identify ways to defend collection lawsuits, debts like MCA and credit card debt, student loans, and other debt collection issues successfully. See today which path is the right one for you. Call our award-winning law firm at (866) 890-7337 or fill out our short contact form for a free consultation. We never share or sell your information; all calls are confidential.
