"Be there or be square" is an outdated maxim, but it remains quite accurate when you are a party to a lawsuit. The no-fail key to avoid having a default judgment entered against you is to show up at the proceedings or trial. If you are a no-show, the court can enter a default judgment against you. This is never good news.
TL;DR (Too Long; Didn't Read)
A default judgment is the same as a judgment after trial, except that it is entered against a party who does not appear at court or enter an appearance (by a written filing) in the proceeding.
A default judgment, like every judgment, is a court ruling in favor of one party and against the other, granted by a court or judge. However, the peculiarity of a default judgment is that it is entered only when one party doesn't show up or make an appearance with a written filing. Because the party doesn't appear, the court settles the legal dispute in favor of the party who does show up.
Often default judgments are entered at the very beginning of the trial. To start a law case, one party files a summons and complaint and serves a copy of these documents on the person being sued. The summons specifies that the person must file a written answer within 30 days. If the person doesn't file a written answer, the other party can ask the court for a default judgment, and the court is likely to grant it.
The party who doesn't show up is bound by the court's ruling for default judgment. However, he can move to set aside the default judgment if he has a legitimate reason for not appearing. Most state laws allow judgments to be set aside on a showing of mistake, inadvertence, surprise, excusable neglect, newly discovered evidence, fraud or a void or satisfied judgment. Don't assume it will be easy to get a default judgment set aside. It is an uphill battle. The denial of a motion to set aside a default judgment can be appealed to a higher court, although the underlying judgment cannot.
Effect of a Default Judgment
If you are the person granted the default judgment, you are entitled to enforce the judgment to the same extent as a judgment after trial. For example, let's say that the default judgment was a money judgment for $25,000 against the defendant, who didn't appear. As the winning party, you have at your disposal all of the collection remedies, like attaching wages, seizing bank accounts or getting a lien on real property.
If you are the person against whom a default judgment is entered, you must either ask for the judgment to be set aside or comply with the judgment. If the judgment is for money, you have all of the protections a debtor usually has, and all states list property that cannot be seized. You can also attempt to compromise the judgment, settling the amount by paying less. But you have lost a lot of settlement leverage, since the other party already has a judgment against you.