Judgments
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Arbitration is an alternative to legal actions and can be instrumental in preventing the award of a money judgment!
The term "arbitration" refers to a method of dispute resolution involving a neutral third party. In contrast, the term "mediator" refers to someone who merely tries to help two disputing parties reach a mutually agreeable solution. So what's the difference? Arbitration is legally binding while mediation is not!
Arbitration is becoming very popular as a means to resolve debt disputes without the high costs associated with court battles. One area where arbitration has become extremely popular is car sales. Many automobile dealers ask you to sign an "arbitration agreement" so that in the case of any dispute concerning your purchase and warranty issues (especially expensive maintenance) you cannot use the court system to seek compensation. Instead, you must use an arbitrator and usually one selected by the car dealer.
When it comes to credit cards, loans, mortgages and many other credit-related issues, arbitration is now written into the credit contract as the primary means of resolution. Read the fine print carefully BEFORE signing any contract that requires arbitration because these contracts always favor the creditor!
However, when it comes to settling debts, arbitration can work in your favor. Whenever a debt dispute arises and court action is threatened, look over your credit contract carefully; you might be entitled to arbitration.
If you end up in court but have made "good faith" efforts to pay your debts and have records to prove your actions, ask the judge to send the case to arbitration based on your willingness to cooperate and to resolve the issue and on the collector's unwillingness to work with you. Some judges may be inclined to send the case to arbitration when debtors demonstrate a willingness to pay but cannot meet the collector's demands.
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How much interest can collectors add to judgments?
All states have their own rules for adding interest to judgments. Sometimes called statutory charges, because the amount of interest is set by law.
Typically, interest begins to accrue from the date the judgment is rendered until the judgment is paid in full.
Use this Garnishment Laws and Procedures link to learn what about your State's interest rate on judgments. After locating your state's garnishment procedures, look at the "Interest Rate at which Judgments Accrue " section located just after the procedures.
State Garnishment Laws
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I received a Default Judgment notice; do I have any options?
If you receive a notice that a default judgment has been issued against you and you were not aware of the court date, immediately go to the court and request copies of all the paperwork.
Look for mistakes and misinformation, especially on when and how you were notified. If you beleive you were not given "due process" then you can file a motion for rehearing or motion to dismiss with the court.
If you can prove that you were not given due process, the judge must consider your circumstances. It's possible to have the case dismissed. Unless you are very comfortable with filing pro se (by yourself) I highly encourage you to discuss your case with an attorney well versed in credit and debt consumer law.
Need a Lawyer? LegalMatch allows you to present your case, and respond only to attorneys who want to help you. It's Free & Confidential.
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What are Default Judgments?
The term "default" refers to a "failure to act" and the term "judgment" (often misspelled as judgement) means the "final disposition in a legal proceeding".
When dealing with credit and debt collection issues, default judgments are typically granted because the debtor fails to act; usually by not paying a debt and then by failing to show up in court.
When you fail to appear in court, the judge usually grants the plaintiff (usually a collector) a default judgment.
If you receive a court appearance notice DO NOT ignore it!
The only way to protect yourself is to appear in court and present the judge with your side of the story. Go to court prepared to show the efforts you've taken in "good faith" to resolve the issue or, in asking for relief in the case of an expired statute of limitations.
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What does "Judgment Proof" really mean?
Judgment-proof is the commonly used term but a more accurate term would be "execution-proof"!
Although creditors and debt collectors win lawsuits, they still have to collect from you, but if you are penniless then you are at least temporarily insulated not from judgment but from execution of the judgment (the collection of the debt)
You may be considered "Judgment Proof" during periods of unemployment or while drawing disability pay or disability retired pay or if you have no assets such as home, car, land, and other big-ticket items. In other words, you have no money and can prove it!
Never ignore a lawsuit just because you are broke or have no assets! If a debt collector or creditor is trying to sue and you believe that you are judgment proof, you must respond to the lawsuit as such.
Failure to appear and show the judge why you are judgment proof opens the door for the judge to grant the collector a "default judgment".
Even though they cannot collect anything from you now, with a judgment against you, collectors can wait many years while periodically trying to collect the debt.
Judgments also show up on your credit report as a huge negative!
If you lose your "judgment proof" status due to new employment, be advised that whoever owns the judgment can seek wage or bank account garnishment.
So, unless the debt has expired, once you're employed again, it's better to negotiate a reduced payoff rather than risk a court-ordered judgment.
Your credit report will show "debt settled" instead of the more negative "judgment"!
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What is a judgment?
The proper term is Court Judgment. A court judgment is the final decisive act of a court in defining the rights of the parties.
It includes a decree and any order from which an appeal lies.
Other terms commonly used include, default judgment, civil judgment, foreign judgment, and judgment proof
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