What Happens if a Creditor Gets a Judgment Against Me?

What Is a Judgment?

A judgment is a court order saying you legally owe a debt. If the creditor sues you and wins, the court gives them this judgment. 

👤 When a judgment is in place, the creditor is often called a judgment creditor.

👤 The person who owes the debt is called a judgment debtor.

Once a creditor or debt collector has a court judgment against you, they can take steps to collect what you owe. This may include garnishing your paycheck or bank account or putting a lien on your property.

What Is a Default Judgment?

A default judgment in a debt collection case happens when the person being sued doesn’t respond to the lawsuit by the deadline. When that happens, the court can automatically rule in favor of the debt collector. 

This gives the collector legal power to collect the debt through methods like wage garnishment or bank account levies.

What Happens After a Judgment Is Entered Against You?

After a judgment is entered against you in a debt collection case, the creditor has the legal right to collect the amount the court says you owe. 

This can lead to judgment enforcement actions like:

• Freezing your bank account: Also called a bank levy, this allows a creditor or debt collector to take money directly from your bank account.

• Garnishing your wages: This allows a creditor to take money from your paycheck.

• Putting a lien on your property: This is a legal hold on assets you own like a car or home.

Most creditors try to collect in the easiest and fastest way possible. In many cases, this means wage garnishment. Taking property is usually a last resort because it’s time-consuming and expensive.

⚠️ You may also have to pay additional costs like interest and court fees, which can make the total amount even higher over time.

Can You Settle After a Judgment?

Often, yes. In fact, many people choose to settle with the creditor after a judgment. 

💡 A settlement is an agreement to pay a lower amount than what you owe. Creditors often accept settlements to avoid long collection efforts or the risk that you might file bankruptcy and they don’t get paid at all.

🛑 Settling can help stop garnishments or levies before they start.

If you want to settle your judgment without going to court or speaking directly to the creditor, you can use SoloSettle. This is a tech-powered tool that helps you negotiate a debt settlement and avoid garnishments or levies. It’s fast, secure, and backed by a money-back guarantee if your offer isn’t delivered.

SoloSuit is an affiliate partner, which means Upsolve may earn a small commission if you choose to use their paid service. This helps keep our services free.

Can You Cancel (Vacate) a Judgment?

It’s possible to ask the court to cancel a judgment or default judgment by filing a motion to vacate. 

💡 When you vacate a judgment, you’re asking the court to undo its earlier decision so your case can go forward.

A motion to vacate is your way of telling the court, “I didn’t have a fair chance to respond, and here’s why.”

To support your motion, you’ll typically need to show a good reason. This could be something like:

• You weren’t properly served with the lawsuit papers

• You were given misleading information about the case

• You had a serious emergency that kept you from responding

In many states, you’ll also need to explain the defense you plan to use if the case is reopened. This shows the court that you’re not just trying to delay things, you have a meaningful response to the lawsuit.

If the court agrees to vacate the judgment, the lawsuit starts up again, and both sides will have the chance to present their case as if the default judgment never happened.

You can learn how to vacate a judgement in Upsolve’s step by step guide.

How Do Creditors Collect 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, or 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

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 is called wage garnishment. 

The 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 and State 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.

Some states have stricter wage garnishment limits than federal law to provide workers with additional protection. 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. 

What Is a Lien?

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.

What Is Post-Judgment Discovery?

After the court issues a judgment, creditors can ask for detailed information about your finances. This is called post-judgment discovery. They might send written questions (called interrogatories), request documents, or even ask the court to make you appear in person for a judgment debtor exam to answer questions.

It’s important not to ignore these requests. Failing to respond could lead to serious consequences, including being held in contempt of court.

What Is a Judgment Debtor Exam?

To collect a debt against you, a judgment creditor needs certain information. For example, to issue a wage garnishment, the creditor must know, at a minimum, where you work. In some cases, the creditor may already have the necessary information. If not, the creditor may need to do a judgment debtor examination.

Any creditor who has a valid judgment against you may ask the court to order a debtor's exam. Depending on your state’s laws, the exam could take place in a courtroom, like a hearing, or at an attorney’s office, like a deposition. You answer questions about your income and assets. A court reporter records all your answers. The exam typically lasts 15–30 minutes.

Your answers at a judgment debtor examination are given under oath, meaning you swear or affirm that you’re telling the truth. If you make false or misleading statements, you could face criminal perjury charges. 

What Do You Need To Take the Exam?

You may be required to bring some documents with you to the examination. A list of these documents is often included in the notice of examination. Examples of documents you might need include things like bank statements, account numbers, pay stubs, tax returns, or credit card statements. During the exam, the creditor’s attorney or representative can also ask you to provide documents as proof of your answers. If so, you must submit the requested evidence within a certain time, usually 30 days. 

Do You Have To Attend? 

Yes. Your appearance at a judgment debtor examination is mandated by court order. The summons or notice you receive ordinarily states the consequences for failing to show up. The court can issue a bench warrant to have you arrested. You may also have to pay a fine.

Sometimes, the judgment creditor may ask you to provide information in writing instead of attending an in-person examination. In this situation, you’ll receive a set of formal interrogatories rather than a summons.

What Are Interrogatories? 

Interrogatories are written questions. They can take the place of the questions the creditor would ask you at an in-person examination. Instead of answering in person, you’ll submit your answers in writing. The interrogatories contain instructions about when and where to send your responses. 

Because interrogatories replace the examination, all the same rules apply. You must answer the questions under oath, usually by attaching a notarized affidavit to your responses. You may be required to provide documents about your assets and income. You must respond to the interrogatories or the judge could find you in contempt of court.

What Questions Can a Judgment Creditor Ask?

The creditor can only ask you for information and documents that will help with debt collection. This ordinarily includes information about your real and personal property, your income and employment, and your other debts and expenses.

Some examples of information a creditor might ask about include:

• Where you work, how much you earn, your job title, and how often you get paid

• What other sources of income you receive or have available

• What assets or property you own, such as real estate, vehicles, jewelry, or other valuables

• Where those assets are located, what condition they’re in, how they’re titled, and what they’re worth

• What other debts you owe, how much you owe, and who you owe

• What deductions or garnishments are already coming out of your paycheck(s)

• How much you typically spend on living expenses and debt payments

⚠️ A judgment creditor can’t use the debtor exam to harass, demean, or threaten you. If you believe that a question is inappropriate or that answering the question could cause harm to you or someone else, you can object to the question. You must provide a legitimate reason for objecting. You may want to talk to an attorney about your objections.

Can Bankruptcy Stop a Judgment?

Yes, filing bankruptcy can stop collection actions — including wage garnishments, bank levies, and property seizures.

This is thanks to something called the automatic stay. This is a legal protection that goes into effect as soon as you file your case. It forces most creditors to pause all collection efforts while your bankruptcy is being processed.

If you're already dealing with a frozen bank account, a paycheck that's being garnished, or the threat of losing property, this can offer immediate relief. Many people also use bankruptcy to erase debts that led to judgments in the first place — especially credit card debt, medical bills, and personal loans.

Whether bankruptcy can help you depends on a few things, like what kind of debt you have and what type of bankruptcy you file. For folks with low income and mostly unsecured debt, Chapter 7 bankruptcy is often the fastest and most affordable option.

If you have a simple Chapter 7 case, Upsolve may be able to help you file for free. Upsolve is a nonprofit that helps people who can’t afford a lawyer get a fresh start through bankruptcy. It’s designed to make the process easier and less stressful — especially if you’re handling it on your own.

Upsolve has helped 17,000 people get rid of over $700 million in debt, and our services are 100% free.

FAQs About Court Judgments

Here are some of the most common questions about judgements resulting from debt collection lawsuits.

Can You Move To Avoid a Judgement?

If you moved states to avoid a judgment, it likely won’t work. Creditors can register their judgment in your new state. This is called domesticating a foreign judgment. Once they do that, they can start collection efforts just like if the judgment happened locally.

Can Arbitration Help You Avoid a Judgment?

Some loan agreements require you to go through arbitration instead of court if there’s a dispute. If the arbitrator decides you owe the money, the creditor can ask a court to enforce that decision by turning it into a judgment.

How Can You Protect Your Property From Creditors?

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. 

Each state has its own wage garnishment exemptions. State exemptions may also protect your bank accounts and paid-off cars. Limits vary by state. 

Some states offer wildcard exemptions, which let you protect any type of property — real or personal — up to a certain dollar amount.

Finally, a homestead exemption may protect your home from being seized by a creditor if a spouse dies or someone files bankruptcy.

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.

How Long Do Judgments Last?

Most judgments last 5–10 years, but in some states they can last up to 20 years or be renewed indefinitely.

You can find out how long a judgment lasts in your state by contacting your state court, a local legal aid office, or your state’s attorney general.