What to Do If There Is a Financial Judgment Against Me?

by Phil M. Fowler ; Updated July 27, 2017
Fighting a court judgment is difficult to do outside of bankruptcy.

A financial judgment refers to an order from the judge which issues at the ending of a lawsuit. The judgment, often called a final judgment, will contain an order for one party to the lawsuit to pay money damages to another lawsuit party. Because a final judgment is primarily an order to pay money, a final judgment is a type of debt. However, it is much easier for creditors to collect the balance due on a final judgment than it is to collect a pre-lawsuit debt. Your choices are to either pay the judgment, in full or in part, or to attempt to fight the collection of the judgment.

Court Hearing

After a creditor obtains a final judgment against you, the creditor has the right to call you in to a post-trial court hearing. At that hearing the creditor can ask you about your finances and your personal assets. The creditor will be looking for ways to satisfy its judgment against you. State laws generally allow creditors to seize your bank accounts or your other property, including real estate, in order to satisfy the judgment. Additionally, if you have a job, state laws allow creditors to garnish your wages, which means your employer will be required to pay your creditor a portion of each of your pay checks until the judgment has been satisfied.

Asset Protection

If you have bank accounts or other personal assets that a creditor could potentially seize, then you may want to consult with an asset protection attorney. Attorneys can help you legally protect your property by taking such measures as creating irrevocable trusts or asset-holding companies, or making gifts to trusted family members or friends.

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Settlement

You always have the option to try and settle your debt with your judgment creditor. Because it is generally pretty easy for a creditor to satisfy a judgment, it can be difficult to negotiate a strong settlement on a final judgment. However, if you can come up with an immediate lump sum of cash to pay the creditor, then the creditor may be willing to settle in exchange for immediate payment. If you are able to reach a settlement agreement, you should not pay any money until the agreement has been put to writing and signed by the creditor.

Bankruptcy

In many instances, the only legal way to prevent a creditor from collecting on a judgment is to file bankruptcy. Chapter 13 bankruptcy can give you time to pay your debts, including the judgment, over three to five years without the threat of having your assets or wages seized or garnished. Chapter 7 can provide even more drastic results by completely eliminating your obligation to satisfy the judgment.

References

About the Author

The Constitution Guru has worked as a writer and editor for "BYU Law Review" and "BYU Journal of Public Law." He is an experienced attorney with a law degree and a B.A. degree in history with an emphasis on U.S. Constitutional history, both earned at Brigham Young University.

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