Bankruptcy Alphabet-J is for Judgment

In Nathaniel Hawthorne’s “The Scarlet Letter”, the protagonist, Hester Prynne, is made to wear the letter “A” made out of scarlet cloth, to exhibit her act of adultery.

In the context of Bankruptcy, often times individuals feel like they bear a similar scarlet letter, the Letter J.

                    J is for Judgment

Photo by Leo Reynolds

In the legal landscape there are several different items that constitute “judgment”, but what I’ll be focusing on is the normal scenario that leads to bankruptcy.

After several months of non-payment, or paying less than the monthly minimum, a credit card company will likely send you off to “collections”. Collections can be a variety of things. It can be an internal department that will harass debtors who owe them money and may have the authority to settle debts. The credit card company may sell the debt you owe to a collection agency who will begin the process of harassing or trying to settle the debt. Lastly, if all else fails, a lawyer is called upon to file a lawsuit.

In Nebraska, when you are sued with a lawsuit, you should be provided notice of the lawsuit either by certified mail or a service processor, such as the county sheriff. For as long as I’ve been a lawyer, it seems more and more I discover situations where debtors are not informed that a lawsuit had been filed against them. That’s another discussion about lawyer ethics.

Once you have been served, you have 30 days to respond to the lawsuit. Often times, there isn’t a defense to the lawsuit, but it could be beneficial to file an Answer so that you can provide yourself with time to find a bankruptcy attorney. If you don’t owe the debt, then you should definitely respond to the lawsuit.

If no response is filed with the court, the collection’s lawyer will go back to the court and request the judge for a Default Judgment, meaning, “Judge, we automatically win because the Defendant hasn’t responded”. The judge will order that a judgment exists against you. The judgment is a legal order that allows the collection’s attorney to use legal remedies to collect the debt, which includes execution of property or garnishing your wages.

An execution of property allows the county sheriff to observe your possessions and indicate in a court filing whether you hold any property that could be sold at a sheriff’s sale. Depending on what the sheriff files, you may have the ability to prevent the sale of some property by using the same bankruptcy exemptions to exempt property.

A collection’s attorney files a Summons for Garnishment in Aid of Execution to garnish the wages or bank account funds. In Nebraska, generally, the amount that can be garnished is either 15% or 25% depending on whether the judgment debtor (the one who owes the debt) is considered a head of household. (Basically, if you are the family breadwinner or use your wages to care for dependents, you are the head of household.) There are exceptions to these amounts based upon exempt wages.

If your employer says that it expects to pay you for the next 60 days, the Court will issue an Order of Continuing Lien, which tells the employer to continue garnishing your wages for 90 days. After that period, the judgment creditor (the one who is entitled to the money) can apply to have the Continuing Lien extended for another 90 day period.

Judgments will remain on your credit report for 7 years from the time they are entered on your report. You can save your credit, or at least recover quicker, by filing a bankruptcy before a judgment can be entered against you.

Other Bankruptcy Lawyers talking about the Letter J are as follows:
Personal Finance Lawyer-New York Bankruptcy Lawyer Jay S. Fleischman
Justify-Northern California Bankruptcy Lawyer, Cathy Moran

Trackbacks

  1. […] Lawyer, Jay S. Fleischman Justify – Northern California Bankruptcy Lawyer, Cathy Moran Judgment – Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell Judgment Liens – Colorado Springs Bankruptcy Lawyer Bob Doig Joint Filing – Marin […]

  2. J is For Judge Julia Gibbons’ Bankruptcy Predictions For 2013…

    There is a second wave of bankruptcy filings that will hit a tsunami level in 2013 according to Judge Julia Gibbons. In my bankruptcy alphabet, J is for Judge. In April, 2012 the Washington Examiner chronicled A Second Bankruptcy Explosion……

  3. […] Attorney, Stuart T. Ing Joint Filing – by Marin County Bankruptcy Attorney, Catherine Eranthe Judgment – by Omaha/Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell Judgment Debtor – by San […]

  4. […] Attorney, Stuart T. Ing Joint Filing – by Marin County Bankruptcy Attorney, Catherine Eranthe Judgment – by Omaha/Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell Judgment Debtor – by […]

  5. […] County Bankruptcy Attorney, Catherine Eranthe Judgment                          Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell Judgment Debtor             San Francisco Bankruptcy Attorney, Jeena Cho Judgment […]

  6. […] Judgment – Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell […]

Speak Your Mind