If you are facing a lawsuit, or if you already have a judgment against you from a lawsuit, you need to know what a creditor with a judgment can do to collect on their judgment. In Texas, judgments are valid for 10 years. Unless it is renewed, it expires automatically after 10 years. However, a creditor can continue to renew the judgment every 10 years indefinitely. As a debt lawyer, we know this area of law inside out, and we can help. For expert insight and a free debt case evaluation, contact our team at Heston Law today.
What Happens If a Creditor Gets a Judgment Against You
Here are a few things creditors are allowed to do to collect on their judgments they have been granted against you:
Bank Account Levy: A creditor can levy (freeze and take) any bank account that has your name on it, including joint accounts. Some sources of funds, such as social security, that are exempt from levy.
Cloud Title to Homestead: A creditor can file an “abstract of judgment” in the real property records, which creates a “cloud on the title” to your home. The cloud on the title then makes it difficult or impossible for you to sell your home or refinance your mortgage.
Foreclose on Non-Homestead Real Estate: If you own any real estate other than your homestead, a creditor may be able to foreclose on the property.
Subpoena Financial Records: A creditor can subpoena your financial records, such as bank statements and tax returns, and then use that information to help them target your assets.
Deposition: A creditor can subpoena you to appear at a deposition and answer questions under oath about your assets and finances.
Writ of Execution: A creditor can get a “Writ of Execution” which is a court order that allows the constable to search your property for “non-exempt” (unprotected) assets. If the constable finds any non-exempt assets, he can take the assets right then and there and then later auction them off.
Can a Creditor Garnish my Paycheck?
Wage garnishments are not allowed in Texas. However, if your payroll is processed out of state, a creditor may be able to garnish your paycheck in the state where your paycheck is generated. Technically, they would be collecting those funds in the other state, not in Texas.
What Can I Do to Resolve a Judgment?
Here are a few ways you can work to resolve a judgment that is filed against you.
Settle: As debt lawyers, we can work on your behalf to help you settle the judgment for a reduced amount. Generally, the amount you have to pay to settle a judgment is much higher than the amount you would have had to pay to resolve the lawsuit before the judgment was entered.
Special rule for homesteads: We can get a judgment released from your homestead without you paying or settling it. Getting it released will allow you to refinance your mortgage or sell your home free and clear of the judgment.
Bankruptcy: You can discharge the judgment debt by filing bankruptcy with a debt lawyer. Filing bankruptcy would also discharge all of your other unsecured debts such as credit cards, medical bills, and loans. You must qualify based on your income and assets to file bankruptcy.
Wait it out: If you are not in a position to settle the judgment, and you don’t want or need to file bankruptcy, then you can just wait it out and hope the judgment expires on its own after the initial 10-year period. If you are “judgment proof” (you have no money in the bank or nonexempt assets), then this may be a viable option.
How Long Does a Judgment Remain on My Credit Report?
A judgment can remain on your credit report for 7 years from the time it is entered. However, many credit bureaus “pick up” (notice) them much later than the actual date of the judgment. For example, if you pay the judgment and get it released, the credit bureau might “pick up” the release and leave the judgment on your credit report for 7 years from the time it is released, instead of 7 years from date of the judgment.
How a Debt Lawyer Can Help You with Your Judgment
As debt lawyers, our job is figure out what makes sense for you. We look at your individual situation and tell you all the options that are available to you. Should you settle the judgment? Or just ignore it? If you ignore it, what can you do to protect yourself from collection? Does bankruptcy make sense? Can you clear the judgment from your homestead without paying it? Does it make sense for you to do so?
If you need to do something with your judgment, we will lay out your options so you can make the decision that’s best for you. Schedule a free no-obligation consultation with our team at Heston Law Firm today.
