May 19, 2024

What Happens When a Defendant Can’t Afford to Pay a Personal Injury Judgment?

If you have been ordered by a court to pay money due to a personal injury lawsuit but can’t afford to pay the judgment, you may wonder what happens next. A personal injury judgment can result in thousands or even millions of dollars in damages the defendant is ordered to pay. But what if the defendant does not pay or can’t pay the full amount?

This article will explain what a personal injury judgment is, how creditors collect on judgments when defendants can’t afford to pay, and what options a judgment debtor has if they cannot pay the amount ordered by the court.

What is a Judgment?

A judgment is a court’s final decision at the end of a lawsuit. It formally states that one party owes another party a sum of money. Judgments can be issued in all civil lawsuits, including personal injury cases.

For example, suppose you are found legally responsible for injuring someone else through negligence in a car accident. In that case, the injured person (the plaintiff) can sue you for damages. If the court rules in favor of the plaintiff, you (the defendant) will be ordered to pay the plaintiff a monetary judgment to compensate them for their injuries and other losses.

Once the court has entered a civil judgment, it legally obligates the defendant to pay the specified amount to the plaintiff, who is now called the judgment creditor. A judgment also allows the judgment creditor to take legal action to collect or enforce the judgment if the defendant fails to pay it.

How Do Creditors Collect on a Judgment?

If you do not or cannot pay the judgment after it has been entered against you, the judgment creditor has several legal tools available to collect on the judgment and take money from you against your will. Methods a creditor may use to collect a judgment debt forcibly include:

  • Wage garnishment – The court can enter an order requiring your employer to withhold a portion of your paycheck and send it to the creditor.
  • Property lien – The creditor can get a court order to place a lien on your real or personal property. This attaches the debt to the property.
  • Bank account levy – The creditor can seize money from your bank accounts.
  • Seizure of assets – The sheriff can be directed to seize valuable non-exempt personal property and sell it to satisfy the debt.

These remedies allow the creditor to collect the money you owe without reliance on voluntary payments. If you do not pay the debt, the creditor can take proactive steps to take money from you.

What Is Wage Garnishment?

Wage garnishment is one of the most common methods a judgment creditor uses to enforce a monetary judgment.

If you fail to pay the judgment voluntarily, the creditor can request the court to issue an order directing your employer to garnish your wages. This means withholding a portion of your paycheck and sending it to the creditor each pay period until the debt is settled.

The amount that can be garnished is limited to prevent the debtor from being left entirely without income. Federal and state laws protect a certain amount of a debtor’s wages based on their income level and whether they support dependents.

For example, the most that can be garnished from a debtor’s disposable earnings in a Florida court is 25%. So if you earn $1,000 per week, a creditor could garnish $250, leaving you $750 to live on and support yourself or your family.

What Is a Property Lien?

A judgment creditor can also place a lien on a debtor’s real or personal property once a money judgment is entered. This attaches the debt to the property.

Common property that can have a lien includes:

  • Real estate and land
  • Vehicles
  • Bank accounts
  • Business assets

By placing a lien, the creditor establishes a right to force the sale or seizure of the property to satisfy the unpaid judgment. Any proceeds from the property’s sale then go to the creditor.

However, certain property is exempt from being liened based on exemption laws that protect a debtor’s essential assets. For example, a creditor cannot place a lien on a Florida resident’s homestead (primary residence) without the owner’s consent.

What Is a Bank Account Levy?

A judgment creditor can also attempt to levy funds in the debtor’s bank accounts. This involves filing a writ with the sheriff’s department directing them to seize money from your accounts and pay it to the creditor.

State and federal laws only protect funds from a bank levy from certain exempt sources, like social security. The sheriff can forcibly remove money from your accounts outside exempt funds that cannot be seized.

This allows a creditor to quickly access funds from the debtor’s checking, savings, or other accounts and apply the levied money to the unpaid court judgment.

The Defendant’s Responsibilities

Once a civil judgment has been formally entered against you, you are legally required to pay it. This means liquidating assets, changing your budget, or making major lifestyle adjustments to generate the money.

You should proactively contact the judgment creditor to discuss payment options if unable to pay the full amount immediately. Ignoring a judgment is one of the worst things you can do. The creditor will continue employing harsh collection tactics unless you demonstrate a good faith effort to take responsibility for the debt.

If you own assets not protected by state or federal exemption laws, you should prepare to sell or forfeit them to satisfy the judgment. Non-exempt assets include second homes, rental properties, luxury vehicles, valuable jewelry, and cash in non-retirement bank accounts over a certain threshold.

You should also promptly respond if you receive any court orders or legal notices of collection actions being taken against you and comply with any mandated financial disclosures or asset seizures.

What happens if a defendant can’t afford to pay a personal injury judgment?

The consequences can be severe if a defendant makes no effort to pay or arrange payment on a judgment. The judgment creditor may pursue debt collection methods to try and collect the judgment. Each state has laws governing how civil judgments are enforced. This could include garnishing wages, putting a lien on the defendant’s real or personal property, or using other tools to collect the debt:

  • Wage garnishment: The creditor can obtain a continuing court order requiring your employer to withhold 25% or more of your paycheck to satisfy the judgment over time.
  • Bank account levy: The sheriff can seize money from your bank accounts or lock your accounts until the balance owed is paid.
  • Property lien: The creditor can place a lien on your real estate or automobile, and then force the sale of the property for repayment.
  • Seizure of personal assets: Court officers may enter your home or business and take possession of valuable items like electronics, jewelry, collectibles, or equipment to be sold to repay the judgment.
  • Suspension of driver’s or professional license: Courts can revoke state licenses for large judgments until you begin making payments.
  • Civil arrest warrant: In extreme cases, if you actively dodge payment, judges may issue a warrant for your arrest to compel you to address the judgment debt.
  • Damaged credit: The judgment becomes a public record item that can severely lower your credit score for up to seven years or more.
  • Accrued interest charges: Post-judgment interest is added onto the balance owed, increasing the amount due.
  • Contempt of court: Ignoring mandates like financial disclosures or asset turnover orders can lead to contempt charges.

As you can see, not making an effort to address a judgment almost always results in the creditor seizing your assets and garnishing your wages, as well as additional court penalties.

Is It Possible to Pay a Judgment in Installments?

Installment plans are one option that judgment debtors can pursue to settle a court judgment gradually over time instead of in one lump sum. This involves negotiating an acceptable structured payment schedule with the judgment creditor.

The creditor is not obligated to accept monthly installments. However, many will if they believe it is the best path toward eventual collection. Having a personal injury attorney assist with constructing a formal payment plan offer and submitting it to the court greatly improves the odds of acceptance.

If you and the creditor cannot agree on voluntary installments, you may be able to request an installment payment order from the court. The judge can order a fair, structured payment schedule, legally binding on the creditor.

A steady, stable income source is generally required to pursue court-ordered installments successfully. You must provide documentation of your income and living expenses to help determine an affordable payment amount.

What Happens to Your Judgment When You Pay

Every time you make a payment on a judgment, whether in lump sum or installments, the court records it. The ultimate goal is to get the judgment marked as “satisfied” through fully repaying the original award amount plus all accumulated interest.

When the balance owed reaches $0, the judgment creditor is required to file a Satisfaction of Judgment document with the court stating that you have paid the judgment in full. This formally notes that the debt obligation is terminated.

Once satisfied, the public judgment is no longer a lien or blight on your credit history. Statutes of limitation limit how long an unsatisfied judgment can be enforced before it expires and becomes uncollectable. Time limits range from 5-20 years based on state laws.

Any judgments against you that get legally canceled or outlive the enforcement expiration become easy to remove from credit reports. However, accurate information about paid judgments generally remains on your history for seven years from the date they were originally issued.

Legal Help: When and Where to Seek It

If you are struggling to pay off a judgment or dealing with aggressive collection efforts, consulting a lawyer knowledgeable in consumer debt cases can help protect your rights. Legal assistance is wise in these situations:

  • You believe the judgment itself is faulty and should be vacated or dismissed.
  • You need help negotiating a payment plan or structuring a settlement offer.
  • Exemptions you are entitled to are not applied to the judgment properly.
  • Collection actions are being taken against you unlawfully.
  • You need a personal injury attorney in contempt of court proceedings.
  • The statute of limitations has expired on the judgment.

Frequently Asked Questions:

Q: Can a judgment creditor take all my wages to satisfy the judgment?

A: In some cases, a judgment creditor may be able to garnish a portion of your wages to satisfy the judgment. However, there are limits to how much can be garnished, and certain exemptions may apply based on your income and other factors.

Q: Can a judgment creditor take all of my personal property?

A: In most cases, a judgment creditor cannot take all your personal property to satisfy a judgment. There are exemptions and limits to protect certain types of property from being taken, such as necessary household items or tools for your profession.

Q: Can I negotiate a payment plan with the judgment creditor?

A: Yes, it is often possible to negotiate a payment plan with the judgment creditor. This can allow you to pay off the judgment over a period of time in manageable installments.

Key Takeaways

  • A judgment is a court’s decision that the defendant owes money to the plaintiff.
  • The judgment creditor can use various methods to collect on the judgment, including wage garnishments, levies, and liens.
  • If a defendant cannot pay the judgment in full, they may be able to set up a payment plan or apply for exemptions.
  • If a defendant does not pay the judgment, the creditor may take further action, such as hiring a debt collector or filing a new lawsuit.
  • Exemptions can protect certain assets or income from being seized to satisfy a judgment.
  • Legal help is available for both debtors and creditors navigating the judgment collection process.

Having a judgment entered against you can be an overwhelming experience. Understanding your responsibilities as the defendant and the options available to the judgment creditor to collect on the debt allows you to make wise decisions. Seek legal advice to protect your rights and property. Be proactive in finding a workable solution, such as negotiating a payment plan that prevents further legal action while satisfying your lawful debts.