What Can A Creditor Do With A Judgment?
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What Can A Creditor Do With A Judgment?

If you have a judgment against you, you probably have some questions:

  • What can the creditor do to collect on the judgment?
  • How will a judgment affect my credit?
  • What can I do to resolve the judgment?

This article explains the basics of judgment collection in Texas.  It is not comprehensive.  It is just a general overview of the most common judgment collection tactics and situations.

What can a creditor do if it gets a judgment against you?

There are many things a judgment can do to satisfy its judgments.  These few things are just the most common post judgment collection tactics.

Bank Account Levy:  A judgment creditor can levy any bank account that has your name on it, including joint accounts with other people.  There are some sources of funds (such as social security) that are exempt from levy even after the funds hit your bank.  But as a general rule, any money in any bank account that has your name on it can be taken.

Judgment Lien:  A judgment creditor can file an “abstract of judgment” in the real property records.  An abstract of judgment acts as a lien on non-homestead real estate and a cloud on the title as to your homestead.  If you have an unresolved abstract of judgment, it will be difficult or impossible for you to buy or sell a home or get a mortgage.

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 taking your money.  For example, they can subpoena your bank records and then levy your bank accounts.

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 home or place of business to see if you have any “non-exempt” (unprotected) property.  If the constable finds any non-exempt property, he can seize it right then and there and later auction it off to pay the judgment.

Repeat Until Paid:  A judgment creditor can repeat these steps over and over again until they recover enough money to pay the judgment in full, including any post judgment interest and legal fees.

Can a judgment creditor garnish my paycheck?

Generally, no.  Texas law does not allow wage garnishments for the purpose of satisfying judgments.  This “unique to Texas” protection, however, does not apply if your payroll is processed in another state.  If your payroll is processed in another state, the judgment creditor may be able to garnish your paycheck.  Technically, under those circumstances, they would be garnishing your paycheck 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 at the end of the initial 10-year period.  However, a creditor can renew its judgment for another 10 years and then another 10 years after that, and so on forever.  Technically, it is possible for a judgment to remain valid for the rest of your life.

How long can a judgment remain on my credit report?

7 years:  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 first “pick up” or “notice” the judgment at a much later date 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.

Agreed Judgments:  When you settle a lawsuit, especially if you settle it on your own, the creditor will want you to sign an “Agreed Judgment” in addition to the settlement agreement.  An Agreed Judgment is just a regular judgment for credit reporting purposes.  It could appear on your credit report and remain there for years.

What can I do to clear up my judgment?

Here are a few ways you can clear up a judgment.

Settle the Judgment:  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 if you had handled the lawsuit properly while it was open.

Clear the Judgment Lien from your Homestead:  We can get the judgment released from your homestead without you paying or settling it.  Getting it released from your homestead will allow you to refinance your mortgage or sell your home free and clear the judgment.

Bankruptcy:  You can discharge the judgment debt by filing bankruptcy.  Filing bankruptcy would discharge all of your other unsecured debts also.  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.  This is generally not a good option, because your circumstances will probably improve at some point, and, if they do, you will could get your bank account levied and lose all your money.

How can you help me with my judgment?

The first thing we do is 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?  Does bankruptcy make sense?  Can you clear the judgment from your homestead without paying it?  Does it make sense to do so?

If it makes sense for you to hire us to do something with your judgment, we will lay out your options and quote you fees for each.  Then you can decide whether or not you want to hire us to resolve your judgment.  Even if you decide not to hire us, you’ll know where you stand and what your rights and options are.

What do I need to do to have you review and evaluate my judgment and give me my options?

Call:  You can call us at 888-347-2157.

Submit an Inquiry:  You can submit an inquiry with our contact form.  If you have a copy of your judgment, you can upload it for us to review.

We look forward to helping your resolve your judgment!