What Happened to That Judgment You Forgot About?

What Happened to That Judgment You Forgot About?

Every day in this country, civil courts decide cases by entering judgments. A judgment is a legal decision recognizing that one party has an obligation to another. In nearly every case, there is some sort of monetary award involved. And in most cases, judgments are never paid. They are eventually forgotten about entirely.

Do you have a judgment in your past, a judgment that you forgot about after struggling to collect? If so, you are not alone. It has been estimated that upwards of 80% of judgment creditors never get their money. Attempting to collect year after year and never seeing a dime can make a judgment fairly easy to forget.

Statutes of Limitation Apply

So what happens to judgments that remain unpaid? That depends on the state. According to Utah judgment collection specialists Judgment Collectors, most states apply statutes of limitation to civil judgments. This simply means that judgments can expire. The average statute of limitations is 7-10 years.

Assume a 7-year statute of limitations in a given state. A creditor who wins a civil lawsuit in that state now has seven years to collect. If they fail to do so, there is a choice to be made near the end of the term. Does the creditor just walk away and forget it? The only other option is to go back to court to renew the judgment.

Limits on Renewals

Judgment Collectors says that some states allow unlimited renewals. A creditor could continually renew a judgment every seven years in perpetuity. Practically speaking, this is not likely. But it is possible. Yet in other states, there are limits.

For example, a state might max out the total number of years a judgment can be enforced. If that max is 20 years, let’s say, a state with a 7-year statute of limitations would only allow two renewals. The second renewal would only be for six years.

All of this can get quite complicated for a creditor who does not know how the system works. This is why so many experts recommend going hard after judgment debtors from the very start. The idea is to extract payment long before the statute of limitations sets in.

Disappearing from the Record

Creditors are not the only ones who eventually forget judgments that go unpaid for too long. Credit bureaus do the same thing. In other words, a judgment doesn’t appear on a debtor’s credit history forever. It eventually goes away. How long depends on a credit bureau’s policies.

The unfortunate truth is that time is the judgment debtor’s best friend. The longer a debtor can avoid paying, the greater the chances that the debt in question will ultimately be forgotten. If a debtor can hold out long enough, the creditor might just give up trying to collect.

Creditors Do Have Legal Options

The other half of the coin is that creditors do not have to give up and forget. They do have legal options. For instance, a lot of states allow wage and bank account garnishment. This particular strategy usually doesn’t yield a lot of money in a short amount of time, but it yields something. Garnishment also puts pressure on the debtor.

Other options include property liens and asset seizure. A lien placed on a debtor’s real property prevents them from selling that property without paying the debt. As for asset seizure, it is a drastic but effective step.

Far too many judgments are simply forgotten because creditors do not manage to secure payment before the statute of limitations kicks in. That is unfortunate because there are ways to secure payment from most judgment debtors.



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