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What can you do after a judgment?

People embroiled in financial difficulties may have more to deal with than just past due credit card bills and the threat of foreclosure. They may also be tied up in lawsuits where the specter of a large judgment is present. Consumers in this situation may think that the judgment may ruin them forever, and that there is nothing that can be done to stop a plaintiff in a lawsuit from taking everything from them.

However, a judgment is merely a court order indicating that a party has the legal right to obtain the property or money that was the subject of the lawsuit. Essentially, it is only one step (of many) in the collection process. If you have heard the adage “a judgment may not be worth the paper that it is printed on” you may understand this fact. As such, debtors with judgments against them have several options.

Settle the debt – As we just said, a judgment is just a recognition of the right of one party to collect on the judgment. A debtor may still settle the matter for less than the amount owed; especially considering the time, effort and costs that the creditor may have to take in collecting the debt.

Enter into a payment plan – Creditors understand that they may not collect the balance of the debt from people with limited means, and they may only collect so much at a time through a garnishment order. Because of this, a debtor may be able to enter into a payment plan that fits both parties’ needs.

Seek bankruptcy protection – A bankruptcy filing stops all collection actions; even those on debt that is validated through a judgment.  In limited circumstances, the creditor could seek to have that judgment determined to be non-dischargeable (such as fraud, domestic support obligations, or damages from driving while under the influence), but most debts are dischargeable.  A bankruptcy filing stays all collection attempts, including wage garnishment, and the bankruptcy discharge then permanently bars the creditor from ever recovering.

The preceding is presented for informational purposes only and is not legal advice. If you have questions about these options, however, an experienced bankruptcy lawyer can help.

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