Before obtaining a court judgment, a bill collector generally has only one way of getting paid: asking. This is done with calls and letters.
However, once the collector (or creditor) sues you and obtains a court judgment, the law allows it to take further steps to collect the debt. The collector can:
- Garnish up to 25% of your net wages. The amount depends on where you live and how much you earn.
- Seize bank or other deposit accounts.
- Record a lien against real property. This lien will have to be paid when you sell or refinance your property. Technically, the creditor could also force a sale of your home in order to get the lien paid. However, creditors rarely do this because after the creditor pays the costs incurred in selling the home, other more senior creditors get paid from the proceeds (like mortgage holders), and the homeowner gets the amount of the states homestead exemption (most states allow homeowners to protect a certain amount of the equity in their home from creditors, called the homestead exemption), there is nothing left for the creditor.
Even if you're not currently working or have no property, the judgment won't disappear. Depending on the state, court judgments can last up to 20 years. In many states, it can be renewed for years beyond that.
To learn more about what creditors can and cannot do when collecting debts and judgments, get Solve Your Money Troubles: Debt, Credit & Bankrupty, by Robin Leonard and Margaret Reiter (Nolo).