The Risks of Allowing a Judgment to Be Entered Against You
In many cases, when someone owes a debt that they know they cannot pay, they will voluntarily opt not to defend a collections lawsuit that is filed against them to collect the debt. Often, the consumer figures that he or she has nothing anyway, so what’s the harm in allowing a judgment to be entered. As the saying goes, you can’t get water out of a rock. However, there are problems that may come with just allowing a collections judgment to be entered against you.
You Can’t Defend
The obvious problem in ignoring a collections lawsuit is that you have no idea if the suit is valid or not. Debt collectors file lawsuits against the wrong people, or on debt people don’t owe or to collect debts that consumers already paid all the time. Sometimes, they sue on debts that are too old to legally be collected.
If you allow a judgment to be entered against you, you are waiving the ability to ever defend against that debt. Once a judgment is entered, you cannot then go back and say “wait a minute—I paid that debt years ago.” Other than certain specific situations, the judgment is the ultimate determination that you owe the debt.
Think of the Future
The other consideration is not what you have now, but what you will have later on. You may not have two pennies to put together right now, and you may be legally correct in saying that there is nothing the collector can get from you to collect on a judgment.
However, attempts to collect on (or execute on) a judgement can be made almost forever. Although there is a 20 year statute of limitations to collect on a debt (a time limit that is long enough as is), legally, that time frame can be extended or renewed by a simple filing by the judgment holder. Thus, there is almost no expiration for the ability to enforce a judgment.
You may have no money now, but you have no idea where you will be in 20 years. As you get older, and make more money, and perhaps buy a home, or recover from whatever financial ills that you are experiencing right now, you will have the collection company on your back. Years after the judgment is entered, you can be called for depositions, asked about your bank accounts, or have your paychecks garnished (amounts taken by the judgment holder that come directly out of your paycheck).
Liens on Property
Judgments also become liens on homes and while in most cases non-mortgage holding creditors cannot foreclose on you to make you pay a debt or satisfy a judgment, the judgment is still a lien on a home that has to be paid at closing. That lien will include attorneys fees, and yearly interest accrued on the judgment. This means that less money will go to you when you sell.
Don’t assume you can avoid a collections lawsuit by ignoring it. Contact Jacobs Legal to speak with one of our Miami consumer rights attorneys today.