What to do if you have a judgement against you

Getting slapped with a court judgement can fill a debtor with dread.

Most credit card debt is "unsecured," meaning it is not backed by property such as a home or car. But after a judgement ruling, the creditor can take steps to seize part of your salary, freeze your bank account, or even haul away your belongings. It can also charge interest at a court-approved rate, typically in the range of 5 percent to 10 percent, until you pay up.

Having a judgement filed against you brings with it a new level of debt collection. Thankfully, there are some things you can do to ease the pain.

So what is a judgement anyway?

A judgment is nothing more than a decision by a court that has been entered into the public record. In order for that decision to be made, someone must file a lawsuit. You will get time to formally fight the lawsuit but if you don’t fight the lawsuit, then a default judgment will be entered. Also, if you do fight and lose the lawsuit, a judgment will also be entered.

I have a judgement against me. Now what?

You’re not supposed to wake up one day to find a judgement against you. You’re supposed to receive notice of a lawsuit, followed by a period of time during which you can choose to respond to the Complaint.

That said, it’s possible that the creditor filed the lawsuit and either served you incorrectly or not at all. It’s also possible that you got the lawsuit papers and didn’t realise they were more than just letters from the creditor.

The most common ways you may find out that there are outstanding judgements against you are:

  • Letter in the mail or phone call from the collection attorneys;
  • Garnishee notice from your payroll department;
  • Freeze on your bank account; or
  • Routine check of your credit report.

When you go past due on a debt, the creditor calls and sends letters in an attempt to convince you to pay. Eventually, it goes to a collection agency.

When all else fails, the matter is turned over to a lawyer. That lawyer files a lawsuit and gets a judgement against you for the specific purpose of getting you to make payments. The judgement becomes a matter of public record and is indexed with the clerk of the court. It also shows up on your credit report as well as any background checks.

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A judgement has been finalised. What are my options?

Once the judgement is entered and finalised, you can’t fight it anymore. The creditor has claimed that you owe money, and a court has agreed. That said, here are some options for you to consider:

  • Pay the balance due in full;
  • Work with the creditor to settle the debt or work out an agreeable payment plan;
  • Allow the creditor to seize your assets in payment of the debt;
  • Repay the debt involuntarily through a garnishee order;
  • File for bankruptcy as a means of discharging or repaying the debt – depending on your situation.

Whatever you do, don’t just ignore things. That only makes it worse.