Creditors obtain more power after a judgment is signed in their favor by a Court. This guide helps to explain some of the collection tactics that creditors use.
Wage Garnishment is allowed in some states and not allowed in others. Usually each state has very specific limits on wage garnishments. For instance, in many states, the amount that can be garnished is limited to a certain percentage of income. I am licensed to practice in Texas, Florida and Arizona. Wage garnishment for most debts is prohibited in Texas. However it is allowed in Florida and Arizona.
Often the most popular post judgment collection activity by creditors is bank garnishments. Once wages are deposited into your bank account they are no longer "wages". The creditor can garnish your account the minute after the judgment is obtained. They do not need to wait for the judgment to be "final". Usually bank garnishments happen months or years later if at all.
Writ of Execution
A Writ of Execution is remedy that creditors use to seize property. Specifically a creditors go to the court where they obtained a judgment and order the writ. After the clerk creates the writ, they send it to the local sheriff or constable. The sheriff or constable is supposed to then seize non-exempt property pursuant to the writ. Usually you will receive notice from the officer that a judgment is owed and to pay the judgment. This usually comes via letter. The officer may visit you at home or at your place of business to discuss the writ and the judgment.
Post Judgment Discovery
You may receive a list of questions to answer from the judgment creditor. These questions usually focus on your assets and they have to be answered under oath. A creditor can ask you just about anything they want in post judgment discovery and if you do not respond or ignore the discovery you can eventually be held in contempt of court. Alldiscovery is due within 30 days of when you were served. a) Interrogatories - Post judgment interrogatories are the most common form of post judgment discovery. Here you are required to answer the questions under oath and there is no limit on the amount of questions they can ask you. For instance, the creditor will likely ask you to identify what bank accounts you have and any other similar assets. b) Production - Post Judgment Production is also likely. With this the creditor asks you to produce documents relating to your assets. They will typically ask for bank statements, tax returns, and many other financial documents. c) Admissions - The creditor may also ask you to admit or deny certain facts about your assets. These must be responded to within 30 days or they are automatically admitted.
Post Judgment Deposition
A Deposition is a where you are placed under oath and you answer questions asked by the attorney who represents the judgment creditor. All of your answers are recorded and possibly videotaped. The attorney will likely ask you all about your assets and ask you to produce documentation prior to the deposition. If you did not adequately answer post judgment discovery, a creditor may opt to take your deposition. These are very difficult to avoid and if you fail to appear you may be held in contempt of court. Also, you are usually required to bring a litany of financial documents with you to the deposition.
Cloud Title on Your Homestead
Many creditors will just hang on to their judgment and wait until you try to sell or re-finance your home. When you try to do this, the transaction will likely be halted by the title company due to the judgment. If the lender filed an abstract of judgment then the judgment will act as a lien on any non-exempt real property that you own. Your homestead is protected from most judgments and the creditor cannot force the sale of your home, however the judgment will likely cloud title on the property. You may be able to obtain a partial release of the judgment to free the title on your homestead.
Public record on Credit Report
A debt judgment will show up in the public record section of your credit report. Even if you settle it, the record of the judgment may still remain. However, you should not simply let it sit and constantly double in value every few years. If you settle a judgment, the balance will be reported as zero and you should get a release. If you obtain a release then you don't have to worry about the judgment anymore. However, the record that it happened may stay on your report because credit reporting agencies comb court records and report judgments.
If you have a judgment against you, take action to protect yourself. A judgment balance will continue to grow. A judgment can last for 10 years and can be renewed for another 10. You should take steps to resolve the judgment. Hiring a debt defense lawyer on a flat fee is a good first step. Perhaps Bankruptcy may also be an option. In any event, you should act now before a creditor takes one or more of the above actions against you.
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