Bills Logo

Advice if Creditor is Increasing balance After Judgment

Get rid of your debt faster with debt relief

Choose your debt amount

See if you qualify

Or speak to a debt consultant  844-731-0836

Mark Cappel
UpdatedMay 27, 2024

I had my wages garnished on account of a default, and made all the payments. Now a creditor is claiming more...Help!

I had a collection account with a major creditor; after many calls and correspondence from to arrive at a payment plan I could afford, I never received a response until I was service with a Civil Lawsuit and my wages were garnished from 9/2007 until 7/2008 for payment of this debt. I never disputed the amount owed, unfortunately, no one would work with me. I was contacted by phone in October, 2008 (4 months later) by the law firm representing the creditor. They have indicated that I still owe "interest" on this matter and filing fees. I received another call 11/13/08. Also, thru the regular mail, I received an unrecorded copy of a judgement indicating the interest due and fees. The law firm rep. will not provide me with any statement of what this "interest" amount is calculated on or even a rate. Just short of hiring an attorney myself (which I should have done years ago), how do I proceed? It's been a financial nightmare that I could not avoid due to disability and huge medical bills. Thank you for any insight you can provide.

Most states do allow creditors to add interest, collection costs, and attorney’s fees to the balance of a judgment after the judgment is entered by the court, but the amount the creditor can add and how it must go about this process will largely depend on your state of residence. For example, in California, a judgment creditor must file with the court a document called a "Memorandum of Costs after Judgment, Acknowledgement of Credit, and Declaration of Accrued Interest," in which it outlines the costs it has incurred in its efforts to enforce the judgment, the interest accrued, and the amount it has received in payments to reduce the judgment balance. Once the creditor files this statement with the court, the court will review the claimed costs and interest, and unless you object to the claim, will likely add the request amount to the judgment balance. The creditor is required to mail you a copy of this document before it is considered by the court, giving you an opportunity to file an objection; if you do file an objection, the court will likely set the matter for a hearing, allowing you and the creditor to argue your cases to the judge.

While the process is similar in many other states, please remember that the procedure outlined above is specific to California, and is only provided as an example of the fact that judgment balances can have interest and fees added. Regardless your state of residence, a judgment creditor usually cannot increase the balance owed on a debt arbitrarily without court approval. Even though you are receiving collection calls claiming you owe additional money on this debt, if you have not received a statement from the creditor outlining what charges it claims you now owe, you should be cautious about making any additional payment. I encourage you to consult with an attorney in your state of residence to discuss the situation you are facing and to determine what steps you can take to protect yourself from arbitrary claims by this judgment creditor. You may also wish to contact the court which entered the judgment against you to inquire about any request for increase in the judgment balance the creditor may have filed without notifying you.

You should remember that in many states, the amount of interest that can be charged on judgments is limited by law; for example, California law limits judgment interest to 10% per annum. If you suspect that the creditor is claiming interest at a rate higher than that allowed by your state law, or requesting fees which are unreasonable, you may wish to consult with an attorney to determine what recourse is available to you.

If the creditor follows the correct procedure to have its costs and legal interest added to the judgment balance, you may have no choice but to pay the amount claimed. However, I would be wary about a call from a creditor demanding payment for costs and interest for which it refuses to provide an itemized statement. As I said, many states (if not most) require judgment a creditor to file a request with the court which issued the judgment to request an increase in its fees; if the creditor has not taken that step in your case, you may simply be dealing with a rouge collector who is trying to squeeze money out of you which is not rightfully owed. I again recommend that you consult with an attorney in your state to determine what actions the creditor can take in this situation and what steps you can take to protect yourself.

I wish you the best of luck in resolving your dispute with this creditor, and hope that the information I have provided helps you Find. Learn. Save.



Dealing with debt

Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q1 2024 was $17.69 trillion. Housing debt totaled $12.82 trillion and non-housing debt was $4.88 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Collection and delinquency rates vary by state. For example, in Delaware, 15% have student loan debt. Of those holding student loan debt, 8% are in default. Auto/retail loan delinquency rate is 4%.

To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.



CChristine, Apr, 2011
What California form do I file with the court to object to the Memorandum of Cost After Judgement ?
BBill, Apr, 2011
See the California Judicial Council Forms for a list of common California forms. Consult with a California lawyer to learn which form to use and how to complete it.
AAl, Mar, 2011
A debt collector was awarded a default judgement against me.The original court records show the clerk judgement (not court judgement) was filed on 3/2007. Today I just received a copy of MC-012 document stating their intent to collect additional $6,000. The copy is not actually signed, nor does it have official court stamp seal. My question is why did they file the form with a different Superior Court. Doesn't state law require that all action/notice be filed with original court that suit was filed. After reviewing my complete case file I also noticed that the Plaintiff's attorney was repremanded and fined by the original court for filing improper documents, not filing Case Management Statement, and not complying with court proceedures. What should I do.
BBill, Mar, 2011
You may be dealing with an unscrupulous lawyer, or one who simply does not understand your state's rules of civil procedure. He or she is hoping you, and probably 100 other people in a situation similar to yours, will be even more ignorant of the law than he or she is. Level the playing field. Consult with a lawyer who has civil litigation experience.

If you cannot afford a lawyer, call your county bar association and ask for the name of the organization in your area that provides no-cost legal services to people with low or no income. Make an appointment with that organization, and bring all of the documents you have regarding the debt, including the dubious ones, to your meeting. The lawyer you meet will advise you accordingly. My guess is your lawyer will enjoy sending a stern letter to the plaintiff's attorney that lists all of the defects in the MC-012, and will file a complaint with the state bar.
BBill, Apr, 2010
Based on the scant information provided, it is impossible for me to say whether you do or do not owe the debt the collection agent claims you owe. I urge you to validate the debt. If the collection agent cannot validate the debt, then the debt is non-collectible. Move quickly, as there is a time-limit for validating a debt.
PPeggy Meharry, Apr, 2010
I appreciated your information regarding the issue of interest. I am wondering if I pay a debt in full, can the third party debt collection agency collect for the interest, keeping in mind that at the beginning of the debt I sent them a cease and desist letter. They are now saying although my debt is paid in full to the original debtor, I still owe $680.00 of interest to the collection agency. If you can shed some light on this I would appreciate it. Thanks