Everything You Need To Know About Small Claims Court and Wage Garnishment

If you've been sued in small claims court, it might feel like a minor issue — but it's not something to ignore. A judgment from small claims court can have serious consequences, just like a judgment from any other court. Once a creditor wins a case against you, they can use powerful tools like wage garnishment or a bank levy to collect the debt.

This guide will walk you through what small claims judgments are, what happens if you get sued, and how people in similar situations have dealt with it — including using bankruptcy as one possible path to relief.

What Is a Small Claims Court?

Small claims courts handle simpler legal disputes, usually involving smaller amounts of money. They’re meant to be more accessible. The procedures are less formal, and the costs to file are lower than in regular civil courts.

Each state sets its own rules for small claims court. For example, in California, individuals can sue for up to $10,000, while businesses are limited to $5,000. These cases tend to move quickly and often don’t involve lawyers.

Even though the process is simpler, the outcome is just as serious. A judgment or court order from small claims court is legally binding. That means once the creditor wins, they have the same power to collect the debt as if they had won in a higher court.

What Happens If You Get Sued in Small Claims Court?

If you receive a summons — that’s the legal notice that you’re being sued — don’t ignore it. Many people feel overwhelmed or embarrassed and try to avoid the situation. But taking action can make a big difference.

To respond to the lawsuit, you'll usually need to file something called an "answer." This is your official response to the court, and it gives you the chance to explain your side or raise any defenses. Many courts have simple forms you can use.

If you don’t respond, the creditor can win by default. That means the court assumes you agree with everything the creditor said, and they automatically get a judgment against you.

If you're feeling intimated by this process or simply want to some support, consider using Solo to draft a answer letter for a small fee. Solo has helped 234,000 people respond to debt lawsuits, and they have a 100% money-back guarantee.

What Can a Judgment Creditor Do?

Once a creditor wins a judgment, they’re called a judgment creditor, and they get access to stronger collection tools. These tools include:

• Wage garnishment: Part of your paycheck is taken directly by your employer and sent to the creditor.

• Bank levy: Money can be taken directly from your bank account.

• Writ of execution: This is a court order that allows the sheriff to take property you own and sell it to pay the debt.

Even if the judgment came from small claims court, these tools are still available. That’s why it’s so important not to ignore a small claims case.

How Long Does a Judgment Stay on Your Record?

In many states, a judgment can stay on your credit report for 5–10 years. Some states also let creditors renew the judgment, which means they can try to collect for even longer — sometimes up to 20 years or more.

During that time, interest may continue to grow on the debt, making it even harder to pay off.

Can You Settle After You’re Sued?

Yes. Many people settle lawsuits even after a case has been filed. In fact, courts often encourage both sides to try to reach an agreement.

If you're able to negotiate with the creditor, you might agree to set up a payment plan, or pay a lump sum for less than the full amount owed.

Creditors may be more open to settling after a lawsuit is filed, especially if they want to avoid the time and cost of going to trial. But keep in mind, if the creditor already has a judgment, they may be less flexible. Especially if they can garnish your wages instead.

What About Wage Garnishment?

If a creditor gets a judgment against you, they can ask the court for a garnishment order. This allows them to take money directly from your paycheck. Your employer is required to follow the order, and you might see less money in your bank account on payday.

Still, there are limits. Federal law says that a creditor can’t take more than: 25% of your take-home pay, or the amount by which your pay exceeds 30 times the federal minimum wage ($7.25 an hour)... whichever is less.

Also, some types of income — like Social Security benefits — are generally protected from garnishment.

If you're worried about losing too much income, you may be able to file a claim of exemption. This is a way to ask the court to protect part of your wages or certain types of income from being garnished.

Can Bankruptcy Help?

Many people use bankruptcy to deal with wage garnishments and judgments from small claims court. Once you file for bankruptcy, an automatic stay goes into effect. This stops most collection actions, including wage garnishment and bank levies, right away.

There are two common types of consumer bankruptcy:

• Chapter 7: This can wipe out many types of debt, including credit card debt and small claims judgments.

• Chapter 13: This creates a payment plan over 3–5 years to repay all or part of your debts.

Most people who file Chapter 7 qualify based on their income and financial situation. It’s common for filers to get a fresh start and stop garnishments permanently.

If you have a simple Chapter 7 case, you may be eligible to use Upsolve's free filing tool. Upsolve is a nonprofit that's helped 17,000 people get rid of over $700 million in debt. Our services are 100% free.

If you’re not sure whether bankruptcy makes sense for you, you can also set up a free consultation to talk to a local bankruptcy attorney.

Let's Recap...

• Small claims courts handle lower-dollar lawsuits in a simpler, faster way — but judgments from these courts are just as serious.

• If you’re sued, respond to the summons. Ignoring it can lead to a default judgment.

• A small claims judgment can result in wage garnishment, a bank levy, or seizure of personal property.

• You may be able to settle the case or negotiate a payment plan with the creditor.

• Filing bankruptcy stops most collections and can eliminate the debt from a judgment entirely.

If you're struggling with wage garnishment or a judgment, Upsolve’s free web app can help you see if Chapter 7 bankruptcy is right for you. It’s built for people who can’t afford a lawyer but still want to get the relief they need. You can also consider setting up a free consultation with a bankruptcy attorney to explore all your options.

You’re not alone — and there is a way forward.