What Is a Money Judgment?

A creditor gets a judgment when it wins a lawsuit against you.

A "judgment" is a piece of paper that a court issues stating that the creditor (or another plaintiff) has won a lawsuit and is entitled to a certain amount of money. Once the creditor has a judgment against you for a specific amount, that creditor can use methods to collect the money that are unavailable without a judgment.

A creditor can get a judgment against you in any of the following situations:

  • You don't respond to the complaint.
  • You don't comply with a judge's order to respond to a discovery request.
  • You lose a summary judgment motion.
  • You lose a trial.

The judgment must be "entered"—that is, filed with the court clerk—which usually happens a day or two after the judge issues it. After the judgment is filed, the court or the creditor's attorney sends you a copy.

    Components of a Money Judgment

    When you get a copy of the judgment, your first step is to understand the amount of money to which the plaintiff is entitled and what each portion represents. Keep in mind that the judge might have knocked off some money in response to a defense or counterclaim you raised.

    A judgment usually consists of the following components:

    • The debt itself. This part of the judgment is the amount of money you borrowed from the creditor, charged on a credit card, or owe on a repossession deficiency balance.
    • Interest. Part of the judgment will be the interest the creditor is entitled to collect under the loan agreement or contract. If you defaulted on a $1,000 loan at 9% annual interest and the creditor obtains a judgment a year later, the court will award the creditor $90 in "prejudgment" interest ($1,000 x .09 = $90). Interest can be added from the time the judgment is entered into the court clerk's record until you pay the judgment in full. Unless the contract sets the interest rate, the post-judgment interest rate is set by your state's law, generally in the 8% to 12% range.
    • Court costs. Almost every state awards the winner of a lawsuit the costs incurred in bringing the case, including filing fees, service costs, discovery costs, and jury fees.
    • Attorneys' fees. If your original contract with the creditor includes the creditor's right to collect attorneys' fees in the event the creditor sues you and wins, these fees will be added to the judgment. These fees can add up to thousands of dollars. Even without an attorneys' fees provision in a contract, the creditor might be entitled to attorneys' fees if state law allows it.

    How Long Judgments Last

    Depending on the state, a creditor may have from five to as many as 20 years to collect a court judgment. In addition, in most states, the judgment can be renewed for a longer time, and in some states, indefinitely, if it isn't collected during the original period. So, the creditor could have an unlimited amount of time to collect a judgment.

    Enforcing Judgments in Different States

    Sometimes a creditor gets a judgment against you in a state where you don't live. This can happen if you've moved since the debt was incurred, if you signed a contract in another state, or if the contract specified another state for suing to enforce the contract and you weren't able to get the location changed. Or, you might own property or have assets outside the state where the judgment was obtained. The creditor can go into court in the state where you now live or have assets and register the original out-of-state judgment. The creditor then has the right to use all the judgment remedies available in the state where you now live or have assets (the second state).

    Talk to an Attorney

    If you need help responding to a lawsuit for nonpayment of a debt, consider hiring a lawyer. But keep this in mind: If it costs more to hire a lawyer than what the creditor seeks in the lawsuit, it probably doesn't make sense to seek an attorney's assistance.

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