I Have a Judgment Against Me. What Happens Next?

What Is a Judgment?

If a creditor sues you and wins the case, the judge will issue a judgment against you. A judgment is a legal decision or court order that says you owe money to someone. Once the judgment is entered, the creditor — now called a judgment creditor — can use the court’s help to collect the debt. This might include garnishing your paycheck, freezing your bank account, or even trying to take your property. Responding quickly can help you avoid a worse-case scenario.

Finding out there’s a court judgment against you can feel scary, especially when your income or property might be at risk. But you have rights and ways to protect yourself. You may be able to negotiate repayment, take advantage of legal protections to keep certain assets, or explore other options to deal with the debt. 

What Happens After a Judgment Is Entered Against You?

Once a court judgment is entered against you, creditors can access powerful debt collection tools they weren’t previously able to use, like wage garnishment. In many cases, this means they can begin collection efforts right away. This could include garnishing your wages, freezing your bank account, or seizing property. These actions require court approval, but having a judgment makes it much easier for creditors to access your money or assets.

After the trial, the court will send both the claimant (the creditor) and the defendant (you) a “Notice of Judgment.” This notice includes important details such as the amount awarded (judgment amount), contact information for the sheriff’s department, and the methods the creditor may use to collect the judgment.

Note that judgments often accrue interest, which begins adding to the amount you owe as soon as the judgment is entered. The longer you go without paying, the more the debt can grow. This is why it’s important to quickly plan how to respond to a judgment if one is entered against you.

What’s a Foreign Judgment?

If the judgment was issued in a state where you don’t live (called a foreign judgment), the creditor must first get it approved, or “domesticated,” in your state’s court before taking action. While this can delay the process, it doesn’t stop the creditor from eventually collecting what they’re owed.

What Happens if You Ignore a Judgment Against You?

If you ignore a judgment, you give the creditor more power to collect what you owe without your input or protection. Creditors can start using enforcement tools like wage garnishment, bank levies, or property seizures, often with little notice. This can leave you scrambling to cover everyday expenses or protect valuable assets.

You also lose the chance to negotiate or challenge the debt. For example, if the creditor is trying to collect more than what you actually owe or is going after property that’s legally exempt, ignoring the situation means you won’t have the opportunity to stop those actions.

Over time, the debt can grow due to interest and additional court or collection fees, making it even harder to pay off. Worse, ignoring court notices or requests for information about your assets could result in serious legal consequences, like being held in contempt of court.

Taking action — even if you can’t pay the full amount — can help you avoid these outcomes. Negotiating, exploring legal protections, or consulting an attorney can make a big difference in how much control you have over the process.

How Do Creditors Collection on Judgments?

Creditors most commonly use wage garnishment to collect on unpaid debt after they win a court judgment. But this isn’t their only option, they may also garnish your bank account, which is often called a bank levy. And they may be able to put a lien on or take your property if it isn’t protected by an exemption. 

Below we explore each of these options more in depth.

Wage Garnishment

Wage garnishment is one way a creditor can collect a judgment against you. After a judgment is entered, the court can order your employer to withhold a portion of your paycheck and send it directly to the creditor until the debt is paid off. This process happens automatically once it’s approved, meaning the money is taken out before your paycheck even reaches you.

Garnishment is often a preferred collection method for creditors because it guarantees them regular payments. However, you have legal rights, including limits on how much a creditor can take from your wages. These limits are set by federal law, and some states offer even stronger protections.

Federal Wage Garnishment Rules

Under federal law, creditors can garnish only the lesser of:

• 25% of your weekly disposable income, or

• The amount your weekly disposable income exceeds 30 times the federal minimum wage (currently $7.25/hour)

Disposable income refers to the money you have left after required deductions like taxes. This means that if your earnings are low, federal law provides a safety net to protect more of your wages from garnishment.

State Wage Garnishment Rules

Some states have stricter wage garnishment limits than federal law to provide workers with additional protection. For example, Colorado only allows creditors to garnish the lesser of:

• 20% of your weekly disposable earnings, or

• The amount your weekly disposable income exceeds 40 times Colorado’s minimum wage or the federal minimum wage, whichever is higher

States can’t offer less protection than federal law, but they can offer more generous exemptions. It’s important to check your state’s rules to understand how much of your wages creditors can garnish and if you qualify for additional protections.

Bank Levy

A bank levy is a powerful collection tool that allows judgment creditors to take money directly from your bank account. Once a creditor has a judgment against you, they can present proof of it to your bank and request a levy. When this happens, your bank is required to freeze the funds in your account and send the money to the creditor to satisfy the debt.

Unlike wage garnishment, where creditors receive a portion of your paycheck over time, a bank levy can allow creditors to take a lump sum from your account, often leaving you without access to your money. However, some funds are protected by law and can’t be taken through a levy. For example, federal benefits like Social Security, disability payments, and VA benefits are generally exempt from a levy.

To protect these exempt funds, it’s crucial to avoid mixing them with non-exempt money in the same account. This is called "commingling," and it can make it harder to prove that certain funds are protected if a levy occurs. If your bank account is levied, you have the right to claim exemptions for protected funds and stop the garnishment of those amounts.

Real or Personal Property Seizure

If you owe a judgment, a creditor can get court permission (usually through a writ of execution) to seize your home, real estate, land, or personal property. With permission, they can get a sheriff or similar law enforcement officer to sell your property and use the proceeds from any sale to pay off your debt.

Any creditor with a lien on any real property will get paid before a judgment creditor gets anything from a seizure. So if your car is seized and sold, the car loan company will be paid off before the judgment creditor gets paid. 

Liens

A lien is a legal right that a creditor has against property used as collateral to back up a debt. Some liens are created through a sale agreement like a car loan and others are created with a legal judgment through the court. To guarantee repayment of a loan or judgment, the creditor uses the lien to seize assets it has a lien on. 

The judgment creditor can record its judgment in the county where it got the judgment. With the judgment recorded, the property can only be sold if the judgment lien is paid off. So, for example, if you sell your house, the judgment creditor with a lien will be paid before you get any sales proceeds.

How Can I Protect My Property?

State exemption laws protect some types of property from creditors. If a creditor has a judgment against you, it can attempt to enforce it by taking your cash or by taking control and selling your property. But, there’s a good chance you’ll be able to keep some of your property by using exemptions. 

State Wage Garnishment Exemptions

Each state has its own wage garnishment exemptions protecting wages, depending on a person’s situation. For example, in Florida if you’re the head of household, your wages can’t be garnished if you provide more than half of the financial support for someone. If you’re unsure about what wage garnishment exemptions apply in your state, consider getting qualified legal advice. Upsolve can help you set up a free consultation with a lawyer near you.

State Exemptions Covering Personal Property

State exemptions may also protect your bank accounts and paid-off cars. Limits vary by state. For example, if you’re an Arizona resident, you have a $5,000 car exemption and a $150 bank account exemption. This means that if you have a car valued at $5,000, your car is safe from judgment creditors.

Some states offer wildcard exemptions, which let you protect any type of property — real or personal — up to a certain dollar amount. For example, in Virginia, you can use a $5,000 wildcard exemption (or $10,000 if you’re over 65) in addition to other exemptions.

State Homestead Exemptions

State law provides rights and protections that may keep a judgment creditor from seizing your property. This includes homestead exemptions, which protect your home from being seized by a creditor if a spouse dies or someone files bankruptcy. Florida and Texas have unlimited homestead exemptions, meaning there’s no dollar limit on your property’s value. But Alabama and Kentucky have low homestead exemptions. Both states limit the dollar amount you can claim as an exemption. It all depends on where you live.

How Do Creditors Find Your Assets?

Judgment creditors have ways to find judgment debtors’ property. These methods help creditors locate a debtor’s assets to pay a judgment with a computer search called skip tracing. They can also use the following:

• Written interrogatories: Interrogatories are written questions you’re required to answer under oath after a judgment is entered. Judgment creditors use these to find out where you work, where you bank, and what property you own.

• Court hearings: A creditor can also request a court hearing where the judge asks you about your assets. You’ll be required to respond to the judge under oath that the answers you give are true.

If you get a notice about a court date and don’t show up to court to answer asset questions, you could be arrested. Show up to avoid serious consequences. If you can’t go to court, call the court clerk and ask for a continuance.

Let’s Summarize...

There are different ways you can reduce the negative impact a judgment can have on you. If you can’t afford to pay a judgment, act fast. Ignoring a judgment will only make your situation worse. You can voluntarily make arrangements to settle and pay debts after judgment. If you don’t, you could lose your money and other real property through wage garnishment, liens, and levies. 

You may also be able to file bankruptcy to deal with judgments. If you’re considering bankruptcy, see if you qualify to use Upsolve’s free tool or consider filing with the help of a qualified Chapter 7 or Chapter 13 bankruptcy attorney.