What Is A Judgment Against You Means

By Sean A. Kelly

A recent conversation with a friend made me realize exactly how dangerous (unpaid) debts can be. You see, this friend of mine works in a law office and recalled an incident in the office a while back. A lady came over to the office looking for a lawyer, claiming to be his aunt and in need of his help. Since her husband had passed away a year before that, she has had to work several jobs to feed her family of five and pay off the never-ending debts. However, without the husband, her income was simply not enough to cover everything. The bank had already foreclosed her house and she was currently living in a small rental house. The trouble was, some of her creditors had come forward with court judgments to seize what little assets that she had left – the TV, old sofas, tables, car and even her wages!

I did a little digging regarding this and it turns out that creditors can indeed go to court and obtain a judgment against you. ‘What is a judgment against you?’ was the question I asked, and you probably should know a little about it too. Here’s some information that I’ve gathered on the subject of judgment.

What is a judgment against you?

If you have loans with a default for a prolonged period, a creditor may go to court to obtain a judgment. A judgment is essentially a decision or order from court; in this case, it is a court order that says you are obligated to pay off your outstanding debts by any (legal) means. In some cases, the creditors are allowed to seize your properties or funds from your bank accounts, or/and garnish your wages. However, these are all usually dependent on individual states. For instance, states like North and South Carolina, Texas and Pennsylvania disallow wage garnishment. Therefore, if you do have a judgment against you, try to find out about the judgment and the stance of your state regarding it.

Judgment proof

After you’ve received a judgment, there is usually only two ways to go about it – pay off the debts or fight it. When I say fight it, I don’t mean for you to fight the creditors physically. What I mean is that you may go to court to counter the judgment, where you may have to prove that you are ‘financially crippled’ and cannot possibly pay off the debt. If the court should decide that you do not have any income or worthy assets that your creditors can seize, then you would likely be considered judgment proof. Having said that, different states may value assets differently. So if you do have some assets left, there is still a possibility that they will remain untouched.

If possible, you may want to work out an arrangement of the payments with your creditors before the matter is brought to court. One of the consequences of a judgment is its effect on your credit scores. It may leave a ‘black mark’ on your rating, which may stay for up to ten years, making it more difficult to get approval on other loans or mortgages in the future. After all, there are plenty of debt loan help available nowadays, whether from banks, credit counseling agencies or the like. In less serious cases, you may still opt for debt consolidation to reduce your monthly payments. In more serious cases, you may have to go for debt settlement; otherwise the last resort may have to be a declaration of bankruptcy.

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