What Does It Mean to Have Judgment Filed Against You?

26 Mar What Does It Mean to Have Judgment Filed Against You?

I received the following question about judgments from a potential client:

Are judgments considered secured debt? Or, are they only considered secured to the point of being a lien above and beyond any exemptions? Isn’t a judgment simply a finding by the court that you owe a debt? I am particularly interested in how judgments are dealt with in a chapter 13. I’m trying to avoid filing a 13 while I wait to see what happens with my income (up or down), and I could feasibly live through a few months of wage garnishments if necessary. However, if judgments themselves create a problem, maybe I should just file?

My response: A judgment refers to a decision by a court that has been entered into the public record. Before a judgment can be issued, a lawsuit must be filed against you. If you do not file an answer to the lawsuit within the time period required by law (usually 20 to 30 days after service of the lawsuit on you), the plaintiff can ask the judge to issue a “default judgment.”

You can also negotiate a “consent judgment” with the plaintiff – in a collection case, a consent judgment usually includes payment terms. You can also file an Answer to the lawsuit and go to trial. The decision by the judge or jury – whether favorable or unfavorable – will be set out in a judgment.

If a judgment has been issued against you in a collection case, your creditor becomes a secured creditor instead of an unsecured creditor. Secured creditors have more rights than unsecured creditors. In most States, a judgment creditor can satisfy its judgment by garnishment against your bank account or your wages, although in some States (such as California), the judgment creditor must take additional steps to have the right to take your property away from you. A judgment creditor can also place a lien against any real estate that you own in the public record. This lien will encumber your property and will need to be paid before you can sell your real property.

Every State has its own rules about how much a judgment creditor can seize from you at any one time and about the judgment creditor’s rights against real and personal property. In Georgia, where I practice, the process by which a judgment creditor can move against a judgment debtor is relatively fast and not particularly burdensome. In other States, the judgment creditor must expend time and money to secure its judgment. California bankruptcy lawyer Cathy Moran writes that judgment creditors must file additional court paperwork before it can excercise their rights against California judgment debtors.

In a Chapter 13 bankruptcy, a judgment creditor has the right to file a secured claim. Typically, secured claims are paid in full in a Chapter 13 and they are paid before unsecured creditors.

In some jurisdictions, debtors routinely file a motion in bankruptcy court to avoid the lien. This procedure varies depending on where you live.

A judgment will also appear on your credit report and can negatively affect your credit score.

I think it is dangerous to have one or more outstanding judgments pending against you. While bankruptcy is not always the best option, I think it would be wise to at least discuss your bankruptcy options and the potential dangers inherent in judgment collection with a qualified bankruptcy lawyer.

by , Atlanta bankruptcy attorney

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Jonathan Ginsberg, Esq.

I represent individuals in Chapter 7 and Chapter 13 cases filed in the Northern District of Georgia, which includes Atlanta, Newnan, Gainesville and Rome. I publish several informative web sites, including www.atlanta-bankruptcy-attorney.com and an Atlanta bankruptcy blog, www.thebklawyer.com/thebkblog. Please mention Bankruptcy Law Network when you call.
4 Comments
  • William McDonough
    Posted at 07:33h, 17 May

    My deeded time share is paid in full. For various personal and financial reasons I can no longer want the time share. The 2011 maintenance dues and taxes came due. I wrote the corp. office in South Caroline, SPM Resorts, and offered the deeded time share back to them with a “deed in lieu of foreclosure”. They did not respond to my certified letter. Now, I am getting calls from a collection company in Arizona and billing that threatens to put a judgement on me for the unpaid annual due and past due charges,etc. I have been given various suggestions from others. One is that when the SPM’s budgeted amount for collection is used, then they will basically back off. What is your response to this situation? Thank you.

  • Helen Bond
    Posted at 00:57h, 11 June

    did they back off or are was it the beginning of a chain of bad advice?

  • Kim
    Posted at 15:10h, 14 June

    Can a lien be placed on a home if you are still paying the bank mortgage on it? And can the lien exceed well over the estimated value of the house, and if the judgement is against one spouse, can they come after the other spouse if the accounts remain separate?

    • Brett Weiss, Maryland Bankruptcy Attorney
      Posted at 16:29h, 17 June

      Can a lien be placed on a home if you are still paying the bank mortgage on it?

      > In most states, yes.

      And can the lien exceed well over the estimated value of the house…

      > Yes.

      and if the judgement is against one spouse, can they come after the other spouse if the accounts remain separate?

      > Except in community property states, normally one spouse is not liable for the other spouse’s debts.