State Judgement Law: Enforcement

Judgments

Each state allows a creditor a specific amount of time to enforce a judgment; however, some states allow a creditor to renew a judgment a second time or indefinitely. This means that a creditor could hold a debt over your head for a significant period of your life or even the rest of your life.

When a creditor obtains a judgment against you, he has several options to choose from to try and satisfy the judgment:

(1) The creditor will try to attach a lien against any property you own, such as your home. This does not mean you will be thrown out of your home, but rather, that you will not have clear title to your property after the creditor files a lien against it. The interest on the judgment lien will continue to accumulate over time, and if and when you sell your home, the creditor will receive the value of the judgment with interest from the sell of your home before you see any money, provided that the statute of limitations on collecting the judgment hasn’t run.

(2) The creditor can locate any monies you have in bank accounts and seize them. Don’t think that the creditor can’t locate the $5,000 you have in savings at your local bank. There are businesses who specialize in helping creditors and debt collection agencies locate all of your assets, including all of your bank accounts. If the creditor finds any money you have that is not exempt from seizure by your state’s laws, he will use his judgment to levy levy your bank account.

(3) A creditor might try to garnish your wages, particularly if you don’t own any property or have any money in savings. The federal government and many states have enacted legislation that limits the amount a creditor can garnish from your wages. The only way to avoid the wage garnishment is to resign from your job, find another, and hope that the creditor doesn’t locate you again, at least for a year or two. The creditor could force you into becoming a job hopper for the rest of your life in order to stay one step ahead of a wage garnishment.

The reasons above are why you should negotiate with creditors for a reduced settlement or an affordable repayment plan before the creditor sues you. If he does sue you, he will do so for the amount you owe, plus attorney and collection fees that could tack on thousands more in addition to what you originally owed. You will have to pay the judgment or file bankruptcy to have the judgment voided. This is unnecessary when you can settle your debt for about 25% of what you owe by threatening to file Chapter 7 bankruptcy.

The table below indicates the number of years a judgment is valid in your state, the maximum interest rate a creditor can seek, and if the judgment can be renewed. The information below is not guaranteed to be accurate. Its purpose is to illustrate to you why you should work out an agreement with the creditor before you are sued so you don’t have a judgment hanging over your head which could eventually force you into filing bankruptcy to get rid of it.

State

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
Washington, DC
West Virginia
Wisconsin
Wyoming

Years Enforceable

20
10
05
10
10
20
20 – 25
3
20
07
10
05
20
20
10
05
15
10
20
12
20
10
10
07
10
10
05
06
20
20
14
20
10
10
21
05
10
05
20
10
10
10
10
08
08
20
10
20
10
20
05

Maximum Interest Rate

12%
7.5% or contract rate
10% or contract rate
10% or contract rate
10% or contract rate
8% or contract rate
10%
9.5% or contract rate
10% or contract rate
12%
10%
10.5%
9%
10%
T-bill rate
10%
12%
About 6.7%
15% or T-bill rate
15% or T-bill rate
12%
About 6%
About 5%
Court or contract rate
Contract rate
9%
Bond rate + 1%
Prime rate + 2%
6.5%
None specified
8.75% or contract rate
9%
8%
12%
10% or contract rate
T-bill rate + 4%
9% or contract rate
6%
12%
14%
10%
10% or contract rate
10%
Contract rate
12%
9% or contract rate
12%
70% of IRS tax rate
10%
12%
10% or contract rate

Can Judgment Be Renewed?

No
No
Yes, every 5 years
Yes
Yes, every 10 years
Yes, every 20 years
No
No
Yes, must renew at 7 yrs
No
Yes
Yes
No
Yes
Yes, can renew in 9th yr
Yes
No
No
Maybe
No
Yes
Yes
No
No
No
No
Yes, every five years
No
No
No
No
Yes
No
Yes
Yes, every five years
Yes
Yes
Yes
No
No
Yes
No
Yes
No
No
No
Yes
No
No
No
No

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