If you are facing a lawsuit, or if you already have a judgment against you from a lawsuit, you need to know what a creditor with a judgment can do to collect on their judgment.
This article will explain the basics of judgment collection in Texas.
What can happen in a creditor gets a judgment against you?
Here are a few common things judgment creditors are allowed to do to collect on their judgments.
Bank Account Levy: A judgment creditor can levy (freeze and take) any bank account that has your name on it, including joint accounts with other people. There are some sources of funds—social security is an example—that are exempt from levy even after the funds hit your bank account.
Cloud Title to Homestead: A judgment creditor can file an “abstract of judgment” in the real property records, which creates a “cloud on the title” to your home. The cloud on the title makes it difficult or impossible for you to sell your home or refinance your mortgage.
Foreclose on Non-Homestead Real Estate: If you own any real estate other than your homestead, a judgment creditor can foreclose on the property.
Subpoena Financial Records: A judgment creditor can subpoena your financial records, such as bank statements and tax returns, and then use that information to assist them in levying your assets.
Deposition: A judgment creditor can subpoena you to appear at a deposition and answer questions under oath about your assets and finances.
Writ of Execution: A judgment creditor can get a “Writ of Execution” which is a court order that allows the constable to search your property for “non-exempt” (unprotected) assets. If the constable finds any non-exempt assets, he can take the assets right then and there and then later auction them off.
Can a judgment creditor garnish my paycheck?
Generally, no. Wage garnishments are not allowed in Texas. However, if your payroll is processed out of state, a judgment creditor may be able to garnish your paycheck in the state where your paycheck is generated. Technically, they would be garnishing the funds in the other state, not in Texas.
How long is a judgment valid?
In Texas, judgments are initially valid for 10 years. Unless it is renewed, it expires automatically after 10 years. However, a creditor can renew the judgment for another 10 years and then another 10 years after that, and so on forever.
How long can a judgment remain on my credit report?
Generally, a judgment can remain on your credit report for 7 years from the time it is entered. However, it is common for the credit bureaus to “pick up” (notice) judgments much later than the actual date of the judgment. For example, if you pay the judgment and get it released, the credit bureau might “pick up” the release and leave the judgment on your credit report for 7 years from the time it is released, instead of 7 years from date of the judgment.
What can I do to resolve a judgment?
Here are a few ways you can resolve a judgment.
Settle: We can help you settle the judgment for a reduced amount. Generally, the amount you have to pay to settle a judgment is much higher than the amount you would have had to pay to resolve the lawsuit before the judgment was entered.
Special rule for homesteads: We can get a judgment released from your homestead without you paying or settling it. Getting it released will allow you to refinance your mortgage or sell your home free and clear of the judgment.
Bankruptcy: You can discharge the judgment debt by filing bankruptcy. Filing bankruptcy would also discharge all of your other unsecured debts such as credit cards, medical bills, and loans. You must qualify based on your income and assets to file bankruptcy.
Wait it out: If you are not in a position to settle the judgment, and you don’t want or need to file bankruptcy, then you can just wait it out and hope the judgment expires on its own after the initial 10-year period. If you are “judgment proof” (you have no money in the bank or nonexempt assets), then this may be a viable option.
How can you help me with my judgment?
First, we figure out what makes sense for you. We look at your individual situation and tell you all the options that are available to you. Should you settle the judgment? Or just ignore it? If you ignore it, what can you do to protect yourself from collection? Does bankruptcy make sense? Can you clear the judgment from your homestead without paying it? Does it make sense for you to do so?
If you need to do something with your judgment, we will lay out your options and quote you fees for each. Once we learn your situation and go through your options, you can decide if you want to hire us to help you with your judgment. Even if you decide not to hire us, you’ll know where you stand and what your options are.
What do I need to do to have you review and evaluate my judgment and give me my options?
Meet with Us: You can call us at 888-347-2157. You can schedule a free no-obligation consultation in one of our offices. If you don’t live near one of our offices, we may be able to assist you over the phone.
Submit an Inquiry: You can submit an inquiry with our contact form. If you have a copy of your judgment (or lawsuit if you don’t yet have a judgment), you can use the upload feature in the contact box at the left of the screen to get us a copy of your judgment (or lawsuit). We will review it for free and let you know what we can do to help you.