How to Avoid Collection of a Judgment
If you default on a debt, the creditor can sue you for the balance owed. A judgment is a court order that establishes the rights and obligations of the parties involved. A judgment in favor of the creditor allows the creditor to collect the debt from you. A creditor can seek repayment by garnisheeing your wages. Once a creditor has a judgment, the debtor has fewer options in avoiding the collection of the judgment.
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Things You'll Need
- Petition to pay judgment in installments
- Petition to terminate or readjust wage garnishment order
- Bankruptcy petition
Instructions
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Negotiate with the creditor. Contact the creditor and ask to make installment payments. The creditor may request a large lump-sum payment up front before beginning the installment payment plan. To finalize the plan, you can file a request with the court to repay the judgment in installments. Obtain the appropriate form from the local court in your area.
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File a petition with the court to readjust or terminate the garnishment order. A wage garnishment is an order issued by a court that requires an employer to withhold a portion of a debtor's wages and send it to the creditor. Federal law limits the garnishment order to 25 percent of the debtor's disposable income or the amount that exceeds 30 times the minimum wage. State law may provide further protection.
You can request an adjustment of a wage garnishment order by filing the appropriate paperwork with the clerk in the local court that issued the garnishment order. Every state requires different forms so contact an attorney or request the appropriate paperwork from the local court. Once you petition the court, the court will hold a hearing on the issue. You'll need to show that you need to keep more than 25 percent of your paycheck to pay other expenses. If the court agrees, it will readjust the garnishment order or terminate it. If the court rules in favor of the creditor, it will let the garnishment order stand.
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File for bankruptcy. If the creditor refuses to negotiate or it is impossible to terminate or readjust a garnishment order, filing for Chapter 7 or Chapter 13 bankruptcy will prevent a creditor from enforcing the judgment. As soon as you file the petition with the local bankruptcy court, an automatic stay immediately takes effect. This prevents creditors from collecting debt owed for as long as the debtor has bankruptcy protection. Once the court discharges all eligible debt, the creditor can no longer collect on the judgment. Under Chapter 13, it is possible that the creditor will receive repayment in some amount during the repayment plan, but the creditor cannot enforce a wage garnishment order.
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