Imagine a fight in prehistoric times over who owns something: Cavemen bopping each other over the head with stones and clubs until a winner emerges who takes all. The U.S. system of justice is designed to prevent this. If someone says you owe him money, he has to go to court and get a judgment against you before he can collect. But look out. Once he has a judgment, a range of modern day stones and clubs are available to him.
Once a creditor has a judgment against you, many different types of enforcement options are in play. These include seizing your bank accounts, attaching your wages and getting a lien on your property.
You may feel "judged" when a judgment is entered against you, and in a way, you are. Before the judgment, there was a dispute. Someone claimed that you owed her money and you claimed you didn't. She took the issue to court and the judge or jury found that you did owe her money. That decision is set out in a court order called a judgment.
When a judgment is entered against you, the court has judged the case and found against you and in favor of the creditor. You have the right to appeal the judgment and ask a higher court to review it, but it will cost you money to do that. Talk to an attorney before you decide to appeal.
The Door to Debt Collection
A judgment enters the door to debt collection. State laws determine which property the creditors can take from you, but usually they can seize part of your salary, bank and investment accounts and real estate or valuable personal property.
But states also determine what cannot be taken. Exempt property is off limits even to judgment creditors. This may include your home, your car and most of your paycheck, depending on what you earn.
If you cannot afford to pay the judgment against you, talk to the creditor honestly before, during and after trial. If most or all of what you own is exempt, you may be what is called "judgment proof." This means you have so little that it is not worth the creditor's time and money to sue you. If you can pay a little each month, the creditor may press you to enter into a repayment agreement. Carefully consider whether this will work for you before you sign it.
The tools available for debt collection can be used to collect money over years. The time period during which a creditor can collect depends on the laws of the state where the judgment was entered. The range of times starts at just a few years but ranges to 10 years in California and 20 years in Alabama. Further, most states allow creditors to renew their judgments when they are about to expire.
Needless too say, a money judgment against you does not improve your credit score. Civil money judgments stay on your credit report for seven years.