What Can a Creditor Do If It Wins a Judgment in Connecticut?
JudgmentWhen a creditor (credit card or other owner of a debt) wins a judgment, the Judge will usually order nominal payments of $35 a week or $151 a month. The following three things are available remedies to the creditor to help enforce the judgment. FYI, a judgment is valid for 20 years.
Wage GarnishmentHow much can be garnished? The lesser of
1) 25% of your disposable pay on a weekly basis OR
2) The amount of your disposable pay minus 40 hours at minimum wage (40 x $8.25 = $330). In other words, your disposable pay minus $330.
The shortcut is this: If your disposable income is LESS than $440 per week, use method #2 (subtract $330). If your disposable income is MORE than $440 per week, use method #1 (25% of your disposable income).
If your disposable income is $330 or less, your wages cannot be garnished.
NOTE: Only one judicial wage garnishment can occur at a time. Garnishments for federal student loans, taxes and other governmental offsets have priority.
Also note, if the judgment is for an amount less than $5,000, wage garnishment cannot occur so long as you make the court ordered monthly payments on-time.
Lien on PropertyA creditor can place a lien on your home. Not all creditors foreclose. Some choose to wait until you refinance or sell. Others, however, will foreclose. Foreclosure can only occur if you have equity in your home. There is a homestead exemption which exempts $75,000 in equity for each homeowner (as reported on the deed). If a husband and wife are both on a deed, $150,000 in equity is exempt. BUT, if there is more than the exempt amount of equity in the home, a creditor can foreclose if it chooses.
YOU READ THAT RIGHT, YOU CAN LOSE YOUR HOUSE OVER A CREDIT CARD DEBT.
Bank Account ExecutionIn plain English, a creditor can take money out of your bank account(s). It does not matter what the money is meant for, even if it is a custodial account. If your social security number is on the account, a creditor can touch it.
Once your bank is notified of the creditor's intent to execute on your account(s), it MUST send you an exemption claim form. PAY ATTENTION TO THIS FORM. You can claim an exemption for $1,000. If you don't have that much, this exemption will make sure you do not lose any money. There are a few other exemptions you can claim, including one stating that the money deposited comes from an exempt source, such as social security or retirement. You must complete this form and get it back to the bank within 15 days. You must send it to the address the bank states on the form (do not bring it to your local branch). If you fail to claim exemptions, or fail to return the form by the due date, you could lose all the money in your account(s).
Judgment ProofWhat if you
1) don't have a job
2) don't own a home
3) don't have a bank account with non-exempt funds (meaning you live on social security and/or retirement only)?
You are what we call "Judgment Proof". There is nothing the creditor can do to collect the judgment. You may have a moral obligation to pay the debt, but legally speaking there is nothing the creditor can do. Note, a judgment is good for 20 years. If you win the lottery or get an inheritance, the creditor will most likely come knocking if it discovers this.
What Cannot OccurYou cannot lose your job!
Very rarely will a creditor attempt to take your automobile (unless this is an auto loan - different rules apply).
You cannot go to jail if you fail to pay the debt. Debtors prisons are unconstitutional!
How to Avoid These Things from Happening to YouContact an attorney as soon as you are served with a lawsuit. The best way to avoid the consequences of a judgment is to avoid a judgment entirely. An attorney can asses your situation and inform you of your rights and options. Then you can make an educated decision on how to handle the situation. Look for a consumer attorney for credit card lawsuits as this tends to be an area they focus on (not to say that a non consumer attorney cannot handle this). You can find consumer attorneys like me here on Avvo, or through the National Association of Consumer Advocates at www.NACA.net
NOTE: An added benefit if discussing your situation with a consumer attorney is that he/she will review the conduct of the creditor and any collection agencies that have been assigned this account. If any party violated the federal Fair Debt Collection Practices Act or the state Creditor Collection Practices Act, you may be entitled to compensation (a great way to pay down the alleged debt!)