Are You Judgment Proof?

My credit card company has received a judgment against me.  Now what?  Well, now the creditor has to find a way to execute that judgment i.e. collect on it.  The creditor can attempt to do this in a couple of different ways.

First, they can attach a lien against any real property you own, such as your home.   This does not mean that you will be thrown out of your home.  The lien will act as a cloud on your title that must be cleared before you can sell your home i.e. if and when you sell your home, the creditor will receive the value of the judgment with interest from the sale proceeds.

What if you don’t own a home?  The creditor can locate the money you have in your bank accounts and seize them.  If the creditor finds any money you have that is not exempt from seizure (in PA there is a general exemption of $300), he will use his judgment to garnish your bank account.  A garnishment is essentially a way to freeze money in a bank or financial account and have the funds paid directly to the creditor by your bank.

Another technique that creditors try to use is wage garnishment.  This is where the creditor requests that your employer pay them directly out of your paycheck a specified amount until the judgment is satisfied; however, any threat of wage garnishment by a
creditor in Pennsylvania is illegal.  Wage garnishment can only occur in very limited circumstances, such as: to pay off a judgment which relates to a divorce, support, a residential lease, federal and state taxes, union dues and health care insurance premiums.

Finally, creditors may try to execute and levy against your personal property including your vehicle.  This process is where the creditor uses legal process to enforce the judgment by seizure and subsequent sale of the personal property owned by you. This involves having a Deputy Sheriff place a levy on your personal property, making it available for a public auction; however, this option is costly and time consuming for the creditor and often times will not result in enough money from the sale to cover the judgment.  This is particularly true in the case of a vehicle that already has a balance owed on it to another creditor.  The
original creditor will have priority over the judgment creditor so unless there is enough value in the vehicle to cover the original creditor’s outstanding balance and the judgment, it will not be worth the creditor’s time or money to have the vehicle repossessed and sold.

In conclusion, creditors have a variety of ways of trying to collect on their judgments; however, enforcing and recovering on a civil judgment is not an easy task.  First the creditor has to find your assets, if there are any worth finding, and then jump through
the administrative hoops to seize that property.  Ultimately, between 80-85% of all legal judgments remain uncollected after 5 or more years; which can be good news for you since court judgments have a life span and must be effectively enforced before the expiration of the judgment.

So what should you do if you determine that you do have property that you need to protect?  The creditor may be willing to set up a voluntary repayment plan with you, allowing you to pay the debt at an affordable rate.  If you decide to negotiate a repayment plan
with the creditor, obtain a written agreement from the creditor stating that they will not attempt to execute on the judgment as long as you make the payments required under the agreement.  Another option, particularly if you have more than one creditor with a judgment against you, may be to file for bankruptcy protection.  If you file for bankruptcy, the creditor will have to discontinue their
attempts to execute on the judgment.


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