A number of years ago, the major credit reporting agencies stopped reporting money judgments. While the move was intended to protect individuals from unnecessary financial harm after losing a civil court case, it has also been used as an excuse to ignore money judgments. Little do people know that ignoring a judgment comes with its own financial consequences despite changes in credit reporting policies.
Money Judgment Basics
A money judgment is a court decision rendered by a civil court. It is designed to rectify a dispute by ordering one party to pay the other. Take a simple debt collection case. A creditor may win a judgment against a debtor in the amount of the original balance due plus legal fees, court costs, and interest.
The judgment officially recognizes the existence of the debt and the debtor’s legal obligation to pay it. It also gives the creditor access to certain collection strategies that would not be allowed otherwise. This is why it is bad form to ignore a judgment and hope that it goes away.
Financial Impacts for the Debtor
It could be that ignoring a money judgment will lead to the creditor forgetting about it and walking away. But it could also lead to the creditor bringing in a specialist like Salt Lake City-based Judgment Collectors. Judgment Collectors is an agency that specializes in collecting unpaid judgments.
One way or another, ignoring a money judgment can have financial impacts on the debtor. Here are some of them:
1. Wage Garnishment
Many states allow judgment creditors to garnish debtor wages. What does this mean? It means that a certain amount from every paycheck is withheld by the debtor’s employer and forwarded to the creditor.
Wage garnishment is limited in order to prevent taking so much money that the debtor can’t pay his bills. Yet amounts can be significant enough to impact the debtor’s lifestyle. They may be left with very little disposable income to pay for things like vacations, dining out, etc.
2. Bank Account Garnishment
Some states also allow bank account garnishment. This is where a certain portion of the debtors’ banked assets are seized by the bank and forwarded to the creditor. Bank account garnishment is a bigger threat in states that allow creditors to go after joint accounts. A debtor’s spouse can suffer financial loss as a result of the debtor’s poor choices.
3. Asset Seizure
Most states give judgment creditors the right to seize and sell certain assets not considered exempt. Investment properties, vacation properties, collectibles, and certain types of valuables are all on the table. A small number of states even allow creditors to go after a debtor’s personal vehicle and a portion of the value of his primary residence.
Needless to say, asset seizure has a big impact on a debtor’s finances. A significant seizure could greatly reduce a debtor’s overall wealth. If I were a judgment debtor and owned valuable assets, I would find a way to pay up rather than risking those assets.
4. Credit Issues
Finally, even though credit reporting agencies no longer report judgments, they do report any debts attached to those judgments. They also report any collection efforts being made by agencies like Judgment Collectors. The combination of both can damage a debtor’s credit score considerably.
Ignoring a money judgment is not a wise idea. Despite what you may have read online, there are financial repercussions for not paying what you owe. You are far better off finding a way to pay your debt, even if that means agreeing to a monthly installment plan.
