Lien, Levy, & Garnishment

The answer to your question depends primarily on your state of residence, as each state regulates what actions judgment holders can to enforce judgments they have obtained.

The quick answer is yes. What the creditor would have to do is to try to collect on the deficiency balance, and then sue your friends for the unpaid portion, then win a judgment, and then finally apply the judgment.

Garnishment

The most common method used by judgment creditors to enforce judgments is wage garnishment, in which a judgment creditor would contact your employer and require your employer to deduct a certain portion of your wages each pay period and send the money to the creditor. However, several states, including Texas, Pennsylvania, North Carolina, and South Carolina, do not allow wage garnishment for the enforcement of most judgments. In several other states, such as New Hampshire, wage garnishment is not the “preferred” method of judgment enforcement because, while possible, it is a tedious and time consuming process for creditors. In most states, creditors are allowed to garnish wages between 10% and 25% of your income, with the percentage allowed being determined by each state. For example, if you live in California, which allows for 25% wage garnishment, and you take home $2,000 per month, a judgment creditor could garnish you at the rate of $500 per month until the debt is paid off. Keep in mind that, generally, only one garnishment is allowed at a time, so if you have several judgments against you, the one who contacted your employer first would be paid first from the garnishment, then the second, and so on. Another important point to remember is that Social Security benefits, pension payments, and many other types of income for the elderly and disabled, are exempt from garnishment, which means that most elderly Americans do not need to fear wage garnishment if they are unable to pay their bills.

Bank Levy

Another option for a creditor trying to enforce a judgment is to request that your bank to place a levy on your bank account. Basically, this means that the creditor has the right to take whatever money in your account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, you can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so you should carefully review your state’s laws to find out if your bank account can be levied.

Lien

The third common way that creditors enforce judgments against consumers is by placing liens on properties owned by judgment debtors. A lien is claim against an asset used to secure a loan. For example, if you own a home, a creditor with a judgment against you will likely place a lien against you that will affect any property you own. Regarding your home, if you sell or refinance your home, you will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity you have in your home, then the lien may prevent you from selling or refinancing until you can pay off the judgment. Again, every state has its own rules about property liens, so if you have a judgment against you and own property, you should review your state’s laws to find out what your creditor can and cannot do to enforce its judgment.

To learn more about your state’s laws regarding the enforcement of judgments, I encourage you to read what Bills.com has written about collection laws.

If you select your state, you can review your states laws regarding what action judgment creditors can take against you. If you have a judgment against you, I encourage you to consult with an attorney licensed in your state to find out how the judgment will affect you, based on your individual financial circumstances.

I wish you the best of luck in resolving the judgment against you.

I hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

Bills.com