What Happens When You Have a Judgment Against You?
If you have ever sued or defaulted on a debt, you may wonder, what happens when you have a judgment against you. A judgment is a legal term, which means that the court has decided you owe money to someone else. There are a number of possible things that could happen when you have a judgment against you.
The dictionary defines a judgment as
- a legal decision; order, decree, or sentence given by a judge or law court
- a debt or other obligation resulting from a court order
- a document recording this obligation
When someone sues you, if they win, they will get a judgment against you. This can be any type of lawsuit, from a family court lawsuit regarding unpaid child support payments to a tort lawsuit if you injured someone, to a lawsuit if you don't pay your credit card bills or if your home is foreclosed on.
When you lose your court case, you may have to pay money. The amount of money that you have to pay is also referred to as a "judgment." Typically, the court wants you to pay your judgment up front. This means they want you to pay the plaintiff the cash then and there.
However, this isn't always possible and this doesn't always happen. If you can't pay right away, a number of different things could happen. Understanding those possible consequences is the key to understanding what happens when you have a judgment against you.
What Happens When You Have a Judgment Against You?
Knowing what happens when you have a judgment against you depends in part on the type of judgment and the state or federal law that applies. There are several possible consequences that you could face if the court declares you must pay money and you can't pay.
In every situation, when you get a judgment against you, this is reported on your credit report, under the Public Records section. This can adversely affect your credit score, and can remain on your credit report for up to ten years.
In some situations, the court can seize assets and order them sold to satisfy the judgment. This is relatively rare, especially in the case of personal lawsuits. However, it could happen in some cases - especially if you owe money to the IRS.
In other rare cases, you may be forced into involuntary bankruptcy. Again, this is relatively rare, especially if the judgment occurs because of unpaid credit card bills, a personal lawsuit or something of the sort. However, this too can happen, especially if you have many creditors who you owe money to who petition for it. If you are forced into involuntary bankruptcy, the court may put you on a payment plan that is established and mandated by the judge.
More commonly, if you have a judgment against you, one of two things will happen:
- A lien will be placed on your property. This is a notation on the title which stipulates that the property cannot be sold because there is an outstanding claim on it. In other words, the person you owe money to has claim to the proceeds from the sale of your house. This doesn't mean you'll have to sell the house or other property right away. The lien will remain on the title until you do, or until the judgment is paid. This can make it very difficult to sell the property (especially if it is a house) since buyers and banks do title searches before purchasing a property. If a house doesn't have clean title, most banks won't grant a mortgage and most buyers won't buy
- Your wages may be garnished. This means that the court will contact your employer and mandate that a certain portion of your paycheck be taken out every week, before you ever have access to the paycheck. This money will go towards satisfying the judgment and paying your debt. The amount that can be taken for garnishment depends on the nature of the debt (a larger garnishment is usually permitted to satisfy debts for unpaid child support, for example), your income and the state laws.
Therefore, what happens when you have a judgment against you depends a lot on the situation. It is always best to talk to a lawyer to fully understand your rights if you are sued or if someone has a judgment against you.