What Is an Outstanding Judgment? (& How to Pay Off Judgments)

What Is an Outstanding Judgment? (& How to Pay Off Judgments)

It has been said that nothing is free in this world, including money waiting to be paid out in court judgments. The philosophy behind the justice system is that from the time a debtor incurs a debt through the time the court renders a judgment in favor of the creditor, the money has stopped belonging to the debtor.

All the while, interest is accruing, which also must be paid. Naturally, this increases the final amount of what the debtor owes to the creditor, and as you can imagine, this number grows and grows. Therefore, a settlement negotiated by an experienced attorney is always preferable to a runaway judgment.

what happens after a judgment is entered against you?

Whether you are a defendant needing to understand how much the true cost of the lawsuit will be or a plaintiff waiting to collect your hard-won money, experienced attorney Seth Kretzer can help you navigate settling cases and paying judgments.

What Is an Outstanding Judgment?

What exactly are outstanding judgments? An outstanding judgment is an amount of money that a State Court or Federal District Court has awarded to a successful plaintiff, but has not yet been paid. When the plaintiff is a creditor, a judgment will often be achieved simply by the defendant debtor failing to show up in court on the assigned day, leading to a default judgment against the debtor.

What Happens After a Judgment Is Filed Against You?

A judgment can turn an otherwise uncollectible old credit account into a readily collectible amount of money. For instance, if a creditor initiates a lawsuit against you, hoping that you’ll ignore it. If you either fail to show up to court or lose the case, the creditor will have options at their disposal, including garnishing your wages, attaching your bank account, seizing your property, and following up the lawsuit with post-judgment discovery, seeking detailed information about your finances.

Abstract of Judgment

An abstract of judgment is a written summary that states how much money a losing debtor owes to the winning creditor in a lawsuit. In addition to the amount of the judgment award, the abstract of judgment will include the rate of interest, court costs, and any specific orders that the judgment debtor must obey.

The abstract of judgment aims to create a public record that automatically creates a lien or claim on any real estate property owned or later acquired by the judgment debtor in the county where the abstract is recorded.

how long can a creditor collect on a judgment?

Post-Judgment Discovery

Nearly all the tools of the law in terms of discovery come back into use after a judgment. Post-judgment discovery is like discovery during active litigation.

Post-judgment discovery may include common tools used in civil or criminal cases, such as depositions, interrogatories, requests for admissions, and production of documents. These can be used on the debtor or even on third parties with knowledge of the debtor’s assets, like accountants, bookkeepers, banks, title companies, insurance companies, law firms, partnerships, brokerage firms, and trustees.

The use of these powerful litigation tools has a precise end — to discover what assets the debtor possesses and what the debtor’s earning power might be so that it can be used to pay the judgment against them.

How Long Does a Creditor Have to Collect on a Judgment?

How long a judgment lasts varies depending on state law. The abstract of judgment in Texas creates a lien on the debtor’s property. The lien continues for ten years from the date of recording and indexing with the county, except in cases where the judgment becomes dormant. See Texas Property Code §52.006.

A judgment becomes dormant where no writ of execution is filed attempting to collect on the judgment. If no writ of execution has been entered during the 10-year life of the abstract, an attorney can revive the judgment for you for an additional two years and start the process anew. See Texas Civil Practice and Remedies Code §34.001; §34.006.

Judgment Lapses and Judgment Renewals

If a judgment creditor does not renew a judgment on time, that judgment “lapses.” It may also lapse if the creditor doesn’t do anything to execute that judgment for a certain period. When a judgment lapses (or becomes “dormant”), the creditor can no longer legally enforce it. That means a creditor cannot garnish your wages, attach your bank account, or seize your property. However, an attorney can revive the judgment for two years and start the process anew. See Texas Civil Practice and Remedies Code §34.001; §34.006.

By way of a court order or filing of an affidavit or another document, the judgment can be renewed for another cycle or ten years. The process can be repeated as needed as long as you stay on top of it, though most creditors will ramp up efforts to collect on a judgment by the end of the first cycle.

Therefore, many debtors, thinking themselves free and clear after years of not receiving a late credit card bill, suddenly receive letters from attorneys nearly a decade after they stopped paying it.

how to pay a judgment against you

How to Pay a Judgment Against You

Many debtors will wonder — how can I pay off a judgment against me, get a mortgage, a car loan, a new job, or just move on with my life? If you have an outstanding judgment against you by a creditor, your attorney will likely be able to help you settle the matter for less.

This is because creditors would almost always rather have money from debtors up front than have to engage in costly and lengthy procedures as those associated with filing abstracts of judgment and engaging in post-judgment discovery. Learning how to collect on a judgment is very resource intensive.

You should consider working with an experienced attorney who will help you figure out how to pay a judgment debt that could involve a significantly lower lump sum payment or manageable payments on the balance of the judgment stretched over time.

Can You Settle a Judgment for Less?

Yes, you can agree to settle a judgment debt for less, even after the court has handed it down. Often, counsel for debtors will work with creditors as tactical negotiators to reduce a debt payment amount or for more manageable payments.

Getting any agreement in writing is critical before you begin making payments. Make sure the agreement spells out all the terms of the settlement. Once the final payment is made, the creditor will file a Satisfaction of Judgment, a public document indicating that the matter has been closed. Learning how to settle a judgment can be complicated — contact a professional if you need help.

Interest Rates for Court Judgments

Do you owe interest on court judgments? Unfortunately, yes. Where the plaintiff prevails in their lawsuit, interest is designed to make the plaintiff whole for the full value of money they should have had since a wrong was committed. This is known as pre-judgment interest.

The answer to the next obvious question — how much interest can be charged on a judgment debt — is either an amount agreed by the parties when they formed a contractual relationship or a default number set by law.

Additionally, post-judgment interest covers the period from when the plaintiff wins their lawsuit to when they collect their compensation. Most cases will involve a defendant having to pay both kinds of interest — pre-judgment interest and post-judgment interest — on court judgments.

Interest is also applied in the federal courts under federal statute 28 U.S.C. 1961 governing the federal post-judgment interest rate on a money judgment in a civil case in a district court.

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Contact the Law Offices of Seth Kretzer for Post-Judgment Help

If you have won a judgment or are a debtor with a judgment to pay, you will need a lawyer with the right knowledge and resources to help you. Nationwide judgment collection attorney Seth Kretzer is on your side and knows how to help you pursue justice. He has experience with federal judgment collection cases and will do everything he can to help you!

Contact the Law Offices of Seth Kretzer to discuss your case.

Phone: 713-775-3050
Fax: 713-929-2019
Houston, TX 77002
440 Louisiana, Suite 1440