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A judgment against you can feel like a financial burden. While the internet might be full of suggestions on “how to not pay a judgement,” this blog post aims to provide a more comprehensive and responsible approach. We’ll explore your options, legal implications, and alternative solutions to navigate this situation effectively.
1. What Does It Mean to Have a Judgment Against You?
When a creditor or debt collector sues you and wins the case, the court issues a judgment in their favor. This judgment outlines the amount you owe, including any interest or fees. Having a judgment against you means that the creditor has legal permission to collect the debt through various means.
Types of Judgments:
- Default Judgment:
- If you fail to respond to a lawsuit within the specified time frame, the court may issue a default judgment.
- Default judgments are unfavorable because they grant the creditor everything they requested without a trial.
- Vacated Judgment:
- A vacated judgment is one that has been removed from your record as if it never happened.
- You can seek to vacate a judgment if you believe it was unfair (e.g., you weren’t properly notified of the lawsuit).
- Unsatisfied Judgment:
- An unsatisfied judgment means the debt remains unpaid.
- Satisfied Judgment:
- A satisfied judgment indicates that the debt has been settled.
- Stipulated Judgment:
- In some cases, you and the creditor may agree to a stipulated judgment, outlining a specific payment arrangement.
2. Can You Go to Jail for Not Paying a Judgment?
Generally, you cannot go to jail for not paying a civil judgment, which is the most common type of judgment related to debt. However, not paying a judgment can have significant consequences, including:
- Wage Garnishment: The creditor can request the court to garnish your wages, meaning a portion of your paycheck is automatically withheld and sent to the creditor until the debt is paid.
- Bank Account Levy: The court can order a levy on your bank account, freezing the funds and allowing the creditor to seize them to satisfy the judgment.
- Asset Seizure: In some cases, the court can authorize the seizure and sale of your non-exempt assets to pay off the debt.
- Damaged Credit Score: A judgment will negatively impact your credit score for up to seven to ten years, making it difficult to obtain loans or favorable interest rates in the future.
- Renewed Collection Efforts: The creditor can continue collection attempts, including phone calls and letters, which can be harassing and disruptive.
Renewed Judgments:
- Creditors can renew unsatisfied judgments before they expire, extending their ability to collect.
3. Strategies to Avoid Paying a Judgment
1. Use Statutory Exemptions:
- Many states have statutory exemptions that protect certain assets from seizure.
- Examples include exemptions for homesteads, personal property, and retirement accounts.
- Research your state’s exemptions and use them strategically.
2. Negotiate with the Creditor:
- Communicate with the creditor and explore settlement options.
- Offer a lump sum payment or propose a reasonable payment plan.
3. File for Bankruptcy:
- Bankruptcy can discharge the debt and stop all collection efforts, including those related to a court judgment.
- Consider bankruptcy if you’re overwhelmed by debt and unable to pay.
4. Attend Debtor’s Examinations:
- If the creditor requests a debtor’s examination, attend it.
- Failure to appear can result in civil contempt or other penalties.
Conclusion
While avoiding payment may seem tempting, it’s essential to understand the consequences. Explore legal options, protect your assets, and consider negotiation or bankruptcy if necessary. Seek legal advice to make informed decisions and navigate the complexities of debt collection.