How to Avoid Paying a Civil Judgment

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Receiving a civil judgment for unpaid debt can be a daunting experience. A judgment grants creditors the legal right to pursue collection efforts, which may include garnishing bank accounts, placing liens on property, or seeking turnover of assets.

However, there are legal strategies and protections that may allow you to avoid paying a civil judgment or minimize its impact.

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What is a Civil Judgment?

A civil judgment is a court ruling that confirms you owe a creditor a specific amount of money. It typically results from a lawsuit filed by a creditor or debt buyer when you fail to pay a debt.

Once issued, a judgment can:

Accrue interest.
Lead to bank account levies or property liens.
Negatively affect your credit.

While judgments can be difficult to avoid, certain legal options may help you reduce or eliminate the obligation.

When Debt Collectors Rarely Sue

Lawsuits are less likely in these scenarios:

Medical Debt: Creditors rarely sue for medical bills in our experience. It’s usually defaulted credit card debt. That being said, if you pay for medical bills on credit cards you are more likely to be sued.
Time-Barred Debts: If the statute of limitations has expired, the collector cannot sue. For most debts this period is four to six years and varies from state to state. The timeframe is often the date of last payment or date of default.

Can You Legally Avoid Paying a Civil Judgment?

Option 1 – File for Bankruptcy

Bankruptcy is one of the most effective ways to avoid paying a civil judgment, especially for unsecured debts like credit card balances or medical bills. The judgment will be discharged and go away with a successful bankruptcy filing.

Types of Bankruptcy:

Chapter 7 Bankruptcy: Discharges most unsecured debts, including civil judgments.
Chapter 13 Bankruptcy: Creates a repayment plan to pay off some or all of the judgment over time.

Benefits of Bankruptcy:

1. Automatic Stay: Filing for bankruptcy immediately halts collection efforts, including judgment enforcement.
2. Debt Discharge: Once the bankruptcy is complete, eligible debts are wiped out, eliminating the judgment.

Option 2 – Be “Judgment Proof”

You may not have any money or assets that can be collected. Each state provides protections for certain types of income and property, making them exempt from collection. If your assets fall under these exemptions, creditors cannot seize them to satisfy a judgment.

Common Exemptions:

Homestead: Your primary residence is protected from judgment creditors.
Retirement Accounts: 401(k)s, IRAs, and pensions are exempt.
Social Security Benefits: These are protected from garnishment.

Wages are fair game in most states so you run the risk of wage garnishment if the majority of states. However, there are often exemptions to this as well.

Option 3 – Negotiate a Settlement and pay less on the Judgment.

You may be able to pay less than what is owed on the judgment. Creditors may be willing to settle the judgment for less than the full amount. This is especially true if they believe they may have difficulty collecting.

Tips for Negotiating:

Offer a Lump Sum: Creditors may accept a reduced payment in exchange for quick resolution.
Request Payment Terms: Propose a manageable payment plan to satisfy the judgment.
Get It in Writing: Ensure any settlement agreement is documented and specifies that the judgment will be marked as “satisfied” or “paid in full.”

Option 4 – Challenge the Judgment

If the judgment was issued improperly or based on incorrect information, you may be able to challenge it.

Grounds for Challenging a Judgment:

Improper Service: If you were not properly served with the lawsuit, the judgment may be void. This may be an uphill battle if the judgment is many years old.
Mistakes or Errors: If the amount claimed is inaccurate or the creditor lacks proof of the debt, you can file a motion to vacate the judgment.

Steps to Challenge:

File a Motion to Vacate or Motion for Reconsideration with the court within the time allowed.
Provide evidence supporting your claim.

Option 6 – Wait for the Judgment to Expire

A civil judgment is enforceable for a certain amount of time. Most states have this as 10 or 20 year limits.

What to Do:

Monitor the judgment’s expiration date.
Avoid acknowledging the debt or making payments, as this could restart the enforcement period.
Maintain property that is exempt from judgment collection like a homestead.

Conclusion

While paying a civil judgment may feel inevitable, there are legal ways to avoid or minimize payment. By asserting exemptions, negotiating settlements, filing for bankruptcy, or challenging improper judgments, you can protect your financial stability. Acting promptly and seeking legal advice are key to handling a civil judgment effectively. If you’re unsure about your options, consulting an attorney can help you navigate the process and secure the best possible outcome.

Mike Weston, Esq.

Mike Weston is a seasoned debt lawsuit defense attorney and founder of Weston Legal. Since 2005, Mike has devoted his career to compassionately helping consumers struggling with issues involving their personal and business debts. Mike is grateful to have been able to help tens of thousands of clients become empowered with knowledge on the path to financial stability.