Vacating, Settling or Dismissing a Money Judgment
Major Points
Removing a judgment from public record
Dismissing/disputing a judgment
Vacating a judgment
Statute of limitations for a money judgment
How does a judgment affect my credit scores?
The judgment process; How does it work?
Step 1: File the Judgment with the County Courts;
Step 2: File a Writ of Execution;
Step 3: Send Questions to Banks;
Step 4: Seize Personal Assets and Vehicles;
Step 5: Levy and Sell Real Property.
Step 1 involves filing the judgment with the courts in every county where the debtor resides or owns property. This allows the judgment to act as a lien against the debtor's property and make it so that they cannot sell the property without satisfying the judgment.
Step 2 involves filing a “Writ of Execution” with the county courts. This is the key to allowing the sheriff to execute the judgment.
Step 3 involves sending instructions to banks to seize bank accounts.
Step 4 involves seizing personal assets from the debtor to satisfy the debt. This can include any personal property belonging to you that is paid off. They cannot seize a vehicle or house unless they plan to pay off the debt. The judgment does not allow other creditors to be left high and dry.
Step 5 involves levying and selling real property. It is important to remember that having a civil judgment for monetary damages does not guarantee that a creditor will be paid, and they will have to revive the judgment or lose it.
What happens if the defendant ignores a judgment?
If a creditor or collection agency has sued you, that results in a money judgment. A judgment won’t guarantee that the creditor will be paid because he still has to hunt for your bank accounts and assets, but if he knows where they are, he can apply to seize them. This is a very stressful situation because you are constantly worrying. Will today be the day my bank account gets hit? Will the judgment creditor seize my car? Will my paycheck be levied? Will I have to sit for debtor examinations?
A money judgment is a security for the debt you owe, like how a house secures a mortgage or a car secures a loan. By placing a judgment against you, the creditor can continue to monitor your assets to find an avenue to collect.
Hopefully, here we can show you some protection methods if you've got a judgment against you and are worried about what will happen if you are sued. You can do several things, including fighting the judgment, vacating the judgment, and settling the judgment out of court.
Steps to fight a money judgment:
Question the judgment
Dismiss judgment via settlement
Statute of limitations on judgments
Vacate the judgment
Can a judgment be challenged?
Is the judgment legal?
When a debt is in collections and you are served with a lawsuit, you have about 30 days to object to the filing if you have a cause. If you can prove that the debt is invalid, you can get the hearing for the judgment dismissed. If you do nothing, even if it’s invalid, it will be entered as a default judgment. For this reason, you should never ignore the request for entry from the court. If you can prove it’s erroneous or has flaws, show up and prove it.
Maybe you were not properly served. Contact the courthouse and see what the file says about service. If you were improperly served, you could get the judgment set aside. The courthouse will charge you a small fee to send you copies, or you can go in person. Some offer their records online now.
Vacating a judgment means canceling or reversing a court decision. If a court has made a judgment against you, you can file a motion to vacate the judgment, which is a written request to the judge asking them to cancel the judgment. If the request is granted, the court will reopen the case and provide you with a new hearing date. The two most common reasons the court will vacate a default judgment are:
1) excusable default
Excusable default means you have a reasonable excuse for missing the original court date and a meritorious defense (a good defense). Examples of reasonable excuses include:
not receiving the summons
being out of town
being ill
being incarcerated
being unable to get off of work
or being in an abusive situation
2) Solid Defense
Examples of good defenses depend on the case type and the case's facts. For example, in a consumer debt case, good defenses include:
the statute of limitations
identity theft, mistaken identity
full or partial payment
dispute of the amount of the debt
and no business relationship with the plaintiff
lack of personal jurisdiction (bad service)
Additionally, if a collection agency has sued you without giving you the mandatory 30-day notice to dispute the validity of the debt, then that violates the Fair Debt Collection Practices Act. This could be used to ask that the court dismiss the judgment. There are certain restrictions to using the validation of debt under the FDCPA.
You cannot use VOD on a judgment, but if the collection agency or attorney never allowed you to dispute the debt upon receiving their first notice, the judgment would be entered in error.
If the debt is yours and you know it, you should contact the JC (judgment creditor) as soon as you are served and before the judgment is entered. You want to avoid the entry of judgment at all costs because it will simply ruin your credit. Call, fax, or mail a request to the person suing you and offer a compromise to settle the debt in exchange for dismissing the case. Court is messy and expensive, so most judgment creditors are open to discussing a settlement.
A judgment as a public record No Longer Affects Credit Scores
A money judgment does not directly impact your credit score anymore. In April 2018, the three major credit bureaus (Equifax, Experian, and TransUnion) removed civil judgments from consumer credit reports, so they no longer appear in your credit history or affect your credit scores.
A money judgment can still have a negative impact on your creditworthiness and make it difficult to qualify for a loan. A creditor can pull a liens and judgments report from the specialty credit bureau LexisNexis to learn if you have a judgment. This information, along with your credit report and credit score, can still be used when evaluating your loan application. A judgment can also impact your ability to seek employment or a place to live because it is a matter of public record.
Question the judgment. Is the judgment still legally allowed to be a public record?
Look at the statute of limitations for judgments and see if your state allows it to be renewed. Each state is different, so yours may not allow for a renewal, in which case you could get it off your public record because it's expired. Many people have successfully deleted a judgment from their public record because it expired and no state law allowed it to be renewed.
Some states allow the judgment to be renewed, so, in essence, the creditor could follow you around forever. It's best to tackle it by trying to negotiate the judgment or have it dismissed because it was invalid, and you can prove it.
Many circumstances could allow you to get the judgment removed from public record. Maybe the judgment creditor passed away -- like an old landlord or legal dispute will a friend or colleague. Maybe the original creditor went out of business. If they don’t respond to your investigation, use that to your advantage. Petition the court if the person suing you is nowhere to be found or has died.
Lots of finance companies and banks have folded in the past decade. Those could be removed because there is no way for them to be disputed. Maybe you were serving overseas and should have never been sued under the Soldiers and Sailors Act. Maybe you were on SSI or permanently disabled, or the case numbers don't match up between the record bureaus and the courthouse. You get the idea. Consider the angles to determine if the judgment can be removed from the public records.
Try to Negotiate the judgment
If the money judgment has been verified as timely and you have no other documentation to prove it is not, then you can negotiate with the creditor to dismiss the judgment in exchange for money. This is a much better rating than a "satisfied judgment." It indicates that it was dismissed and, therefore, "legally void." This IS a better rating than showing you paid it, meaning you owed it, and it will not be removed from public record.
When negotiating with the judgment creditor, set your terms and have the JC sign and date them. This can be used for proof later if the credit rating doesn't change on your public record. Once you agree, the judgment creditor will complete a judgment dismissal form and file it with the court. A dismissed judgment is very different from a satisfied judgment.
Use caution when negotiating a money judgment. It is possible to negotiate with a creditor after being served with a lawsuit; however, it is important to understand that it is not always advisable. The best option is to consult with a lawyer to review your options. They can help you determine whether you should attempt to negotiate your debts or do something else, such as file for bankruptcy.
If a creditor agrees to negotiate the debt, make sure to get every detail in writing. This agreement should include the amount you will pay and the timeline for repayment. When negotiating, it is important to know your rights and understand the risks associated with debt negotiation. Remember, creditors want to get paid and may be willing to accept a lower amount than what is owed if it means they will get some of their money back.
Vacating a money judgment
There is a procedure called a "motion to vacate" judgment. This procedure can be used if you have good cause to believe you were sued in error, were exempt because of retirement or SSI, or served improperly. You should have been notified when you were served, giving you plenty of time to file a response. If you weren't, that could be improper service and cause you to have it set aside or vacated.
The critical thing to remember is how the judgment can be processed in your state. While one may allow service by mail, another may not. If the rules were not followed and you can find a flaw, that could lead to vacating the judgment. Search Google for "judgments +your state". Maybe you'll uncover other ideas that people in your state have come up against or a forum discussing illegal judgments that apply to you.
The great news is that about 70% of judgments are awarded in error; you have to know what to look for. Getting the judgment vacated means it does not stay on your credit, and you do not have to pay it, so if you think you have a good case for a vacate motion, then by all means, seriously consider pursuing it.
You can attempt to vacate the judgment yourself or use a lawyer; If you do not know much about it, you are better off hiring a lawyer for a few hundred dollars. Remember to be careful and educate yourself about any issues where the law is concerned. The Internet gives us unlimited access to legal links and opinions where we can thoroughly research the topic before moving forward.
One thing to keep in mind when you decide to attempt to vacate or dispute a judgment is that you are putting yourself on the creditor’s radar. You don’t want to point them in your direction if they've left you alone for many years.
Statute of limitations on money judgments
The statute of limitations (SOL) on judgments is long. Usually 10 to 20 years, and many are renewable (a judgment may be renewed if the creditor files a new suit seeking to renew the judgment before the expiration of the original judgment) — therefore, the judgment could follow you forever. Even if you pay it, you will be stuck with a 'satisfied judgment" for seven years from when it was satisfied, not filed. This can be hopeless, so avoid being sued at all costs.
Statute of limitations on debts
Always check the statute of limitations for the debt if you have been served because if it is expired (and many debts expire in 4-6 years), you can use that to dismiss the case. Many debtors are served for their debts; they simply do not show up in court, and a default judgment is entered against them—a big mistake. Had half of them checked the SOL, they would have found that the debt may have expired years before.
How much can be taken from your paycheck for a judgment?
A money judgment can take up to 25% of an individual's paycheck, depending on the state and the amount of the judgment. Generally, a creditor can take up to 25% of the disposable income after deductions such as taxes and Social Security. If the disposable income is less than $770 per week, the creditor can take up to 18% of the income or 50 times the state's minimum wage, whichever is greater. If a debtor has multiple judgments, the total amount taken from a paycheck may exceed 25%. It is important to note that some states may have additional restrictions on how much money can be taken from a paycheck.
Can I go to jail if I don’t pay a monetary judgment?
You cannot go to jail for owing a debt or failing to pay a money judgment in the US. However, you may have to serve jail time if you fail to adhere to post-judgment court procedures. The US Supreme Court has outlawed the use of prison to punish indigent debtors, so debt collectors cannot arrest you for a credit card or other consumer debt. You may face jail time if you fail to pay taxes or child support, as those are state matters.
