When all else fails, the matter is turned over to a lawyer. That lawyer files a lawsuit and gets a judgment against you for the specific purpose of getting you to make payments. The judgment becomes a matter of public record, and is indexed with the clerk of the court. It shows up on your credit report as well as on any background checks. The judgment is considered a lien against your property, including any real estate that you have, in the state in which the judgment is filed.
In other words, a judgment filed in California has no bearing upon property located in New York unless the creditor takes the California judgment to a New York court and has it filed there as well.
If a judgment has been issued against you, the creditor can satisfy its judgment by freezing your bank account and taking a portion of your wages. Procedures differ from state to state. For example, in New York the creditor needs to get in touch with an enforcement officer such as a Marshal or Sheriff. Once that happens, he or she can serve a restraining notice on the bank, or on some other person or business that owes money to the judgment debtor, and eventually take the money.
If you are employed, the enforcement officer can garnish take a portion of your salary to satisfy the judgment. The creditor has claimed that you owe money, and a court has agreed. That said, here are some options for you to consider:. The sheriff or constable will bring you a copy of the execution and take your car or put a lien on your house. If you are collection proof, the creditor cannot take any of your assets or income even though they have a judgment against you.
If some of your stuff or some of your income is protected by exemptions, you need to know what and how much so that you can make sure that it is not taken from you.
If you know what exemptions protect your income or things , you can tell the judge and the judge will not order you to pay from those assets and income. The plaintiff and the judge will probably ask you again and again if you can pay anything towards the debt.
They will also ask if you are willing to enter into a repayment plan. A repayment plan is an agreement with the creditor that you will pay back the debt by paying a set amount every month. If the agreement is made into a court order and you do not pay back the amount you have agreed to pay, you could be in violation of the court order.
Only agree to a repayment plan if you really agree. If you do not agree with the amount stated, or you cannot pay back any amount every month, do not agree to a repayment plan.
If you have income that is collection proof a court cannot order you to pay back the debt from that income. But if you agree in a repayment plan to pay a sum out of the protected income, the court can make you pay from your protected income. You have the right to an interpreter. You may be able to get free legal help from your local legal aid program. Or email a question about your own legal problem to a lawyer. What happens if I do not have the money to pay the debt or judgment? Show Endnotes Hide Endnotes.
Always go to court If you cannot pay the debt, tell the creditor. Even if you have no money, the court can decide: the creditor has won the lawsuit, and, you still owe that sum of money to that person or company. If you lose your case The judge has already decided that you owe money to the plaintiff. Agreements when you do not have money to pay the debt: The plaintiff and the judge will probably ask you again and again if you can pay anything towards the debt.
Why am I being sued again? Feedback Was the page helpful? Easy to understand? Complete with enough details? In most cases, all of the following must apply for you to be judgment proof:. The term "judgment proof" is a bit of a misnomer because the creditor can sue you and get a judgment—it just can't collect on the judgment.
When a creditor sues you and wins, the court issues a money judgment against you. Once the creditor has a money judgment, it can use various methods to collect on that judgment. It can garnish your wages, place a levy on your bank account , or place a lien against any real estate that you own. Often, a judgment creditor will seek to garnish your income to satisfy a money judgment.
With garnishment, money is taken out of your paycheck to pay back the judgment. But a judgment creditor can't take income that you receive from any one or more of the following sources:. Also, federal law limits the amount that a judgment creditor can take from your paycheck. Some states set a lower percentage limit for how much of your wages can be garnished.
To learn more about how wage garnishment works and the limits in your state, see our Wage Garnishment articles. Often, a judgment creditor will attempt to levy against your bank account to satisfy a money judgment. The creditor requests that the court issue an order to the bank to freeze the money in your bank account.
If any of the exempt income noted above is in your bank account and those funds are levied, the judgment creditor and the court who issued the levy, must release those funds back to you. If you don't own real estate, a judgment creditor won't be able to place a lien against any real property to satisfy a money judgment.
If, though, your financial circumstances should change and you're able to buy real estate, that judgment can attach to the property at that time. You won't be able to later sell or refinance your property without the judgment being paid. A judgment creditor can try to grab your personal property , like your car or jewelry, to satisfy a money judgment. To do so, the judgment creditor must first get a writ of execution from the court that identifies the property it intends to take.
If a creditor has obtained a judgment against you and seeks to enforce it by taking your cash, or by seizing and selling other property, you most likely can keep at least some of that property by using exemptions. Often, a judgment creditor won't attempt to levy your personal property because of the time and expense incurred in locating the property and the added expense of advertising and selling the property.
Even if you're judgment proof, you usually shouldn't ignore your creditors and debts. Being judgment proof is, in some cases, only a temporary condition.
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