It’s normal to feel overwhelmed and anxious if you’ve been ordered to pay a judgment. But know that you do have options. Understanding how to stop a judgment from being renewed could be the first step on your path to financial wellness. Here’s what steps to take if you’re trying to avoid paying a judgment against you.
Understanding Judgments in Debt Collection Lawsuits
Understanding the basics of debt collection law is crucial to feeling more in control over your situation. Let’s get started by reviewing some common terminology.
What is a judgment?
A judgment is a decision issued by a court laying out the rights and responsibilities of both debtor and creditor in a debt collection lawsuit. It often gives a creditor stronger tools for financial restitution. When a debt collection lawsuit is successful, the prevailing party — known as the “judgment collector” — gains legal authority to make you repay the debt.
For example, if you have unpaid credit card debt, your creditor can get a judgment (that is, a court order) to legally force you to pay.
Keep in mind that while a judgment legally obliges the debtor to pay, it does not in and of itself enforce payment. It’s the creditor’s responsibility to initiate collection efforts according to the laws of their jurisdictions following the judgment. They could use several strategies to do this such as:
- Placing a lien on any real estate you own in the state the judgment was filed
- Garnishing your wages
- Levying your bank accounts to retrieve funds
- Seizing other personal property such as vehicles
It’s important to remember that, for creditors, obtaining a judgment is just the first step of a long process. Debtors don’t necessarily have to pay the judgment as soon as it is filed. There are alternative options to stop a judgment from being renewed. These alternatives can stall or even stop the process of debt collection. A judgment creditor isn’t necessarily going to freeze your bank account the day after a judgment is filed. But whatever you do, don’t ignore the judgment. That could make your situation even worse. Instead, start by understanding the basics of judgments and consider getting legal advice from a trusted professional.
Understanding the process of judgment renewal
Judgments typically don’t last forever. Usually, there’s a limited amount of time through which they can be enforced. A judgment renewal refers to the legal process a creditor uses to extend the period a court-issued judgment is valid. Filing a judgment renewal requires the creditor to submit specific documentation to the court before the judgment lapses. This then needs to be approved before a creditor can maintain the legal authority to continue to pursue payment.
The length of time before a judgment renewal is needed varies greatly between states. In some states, judgments need to be renewed every five to seven years. In others creditors can go up to 20 years without needing to file a renewal.
How judgments impact your credit
A judgment is entered into the public record and a judgment lien will appear on background checks. However, judgments are no longer reported to the credit bureaus and therefore, will not show up on your credit report. That means a judgment will not impact your credit score.
That said, potential lenders can still see judgments against you through the public record. So while it may not impact your credit score directly, it could impact an individual lender’s decision on whether you qualify for credit. Keep in mind that any financial decisions you made before the judgment could also impact your credit. If you have a history of missed payments, for example, these could remain on your credit history for up to seven years.
Judgments and Your Rights
Receiving a judgment against you can be stressful, but you do have rights that protect your financial future. These laws are typically not federal law, but largely dependent on the state where the judgment was obtained.
For instance, many states exempt property that falls under the following guidelines:
- Your primary home: As long as your primary home is valued under a certain amount, it can often be exempt from a judgment.
- Your primary vehicle: If your primary vehicle’s value is below the exemption amount in your state your creditor will not be able to seize it.
You may also be able to protect other types of property if you can prove that losing it would cause you undue hardship. Personal property such as clothing or jewelry is also unlikely to be pursued by creditors unless it has extreme value.
How to stop a judgment from being renewed
There are specific legal requirements to prevent the renewal of judgment. This can include filing a motion to vacate the judgment. It can also include proving the debt has been paid, or demonstrating that the statute of limitations has passed. Legal requirements vary by jurisdiction, so it’s important to consult with a local attorney. The ability to prevent renewal largely depends on state laws. It can also depend on the nature of the judgment, and the debtor’s ability to either pay or negotiate the judgment debt.
Here are three options if you’re looking to stop a judgment from being renewed.
1. Hire Professional Legal Help
It’s possible to stop a judgment renewal by yourself, but it involves complicated legal procedures that could be challenging to navigate. Hiring a lawyer who is well-versed in this area of law is usually advisable to increase the chances of a successful outcome.
Tayne Law provides realistic debt relief services that can help you navigate the often confusing legal process of resolving a judgment.
2. Negotiate With the Creditor
It’s usually never too late to start negotiating, even if a judgment has already been filed. If a judgment has been filed against you, you can still reach an agreement before the creditor resorts to property seizure or wage garnishment. You might even be able to negotiate a payment that is less than the amount of the judgment. Negotiating with the creditor and establishing a payment schedule could result in you paying less than if they resort to alternative methods to recover their funds.
If you don’t feel comfortable negotiating by yourself, or unsure where to start, a debt help attorney can guide you through the process. They can suggest negotiation tactics that have worked for others in your situation before.
3. File for Bankruptcy
Most judgments, including those resulting from debts such as credit cards and loans, can be discharged in bankruptcy. If you’re planning to file for bankruptcy, an attorney can help you file a petition to place a stay on judgments to prevent further action by your creditors.
While one of the pros of filing for Chapter 7 bankruptcy could be that it helps you avoid paying your judgment, there are also many negatives to consider. It’s not a decision to be made lightly. Discuss your options with a financial professional who can help you understand the nuances of your situation before you take action.
Be proactive to avoid a judgment
When it comes to judgments, the best cure is prevention. When possible, avoid a judgment by negotiating a payment plan or new repayment terms with your creditor before they initiate legal proceedings against you. Once a judgment is filed, communicating with your creditors – and advocating for your legal rights – can be stressful.
The professionals at Tayne Law can help simplify the process and ensure your rights are upheld. Finding a path to avoid a judgment, or stop a judgment from being renewed, can help you regain control of your finances. Call us for a free phone consultation at 866-890-7337 or fill out our short contact form, and we’ll contact you. All conversations are confidential, and we never share or sell your information.
