How to Deal With a Default Judgment

Have you recently lost a debt collection lawsuit case to a debt collector, but have no way to pay it without ruining yourself financially? Many debt collectors are simply looking to gain money, and they often don’t expect you to have any way to defend yourself in court, but don’t fret, there are ways to help get you out of this sticky situation.

What is a Default Judgment?

A default judgment is a type of ruling granted by a court. It happens when a party (most often the defendant) doesn’t show up to the court hearing, or otherwise doesn’t follow a court-ordered action and ends with the court ruling in favor of the opposing party. If one doesn’t show up to the hearing at the district court or small claims court, a judge may proclaim default judgment and rule in favor of the party that followed the court-ordered action. The defendant is then obligated to adhere to this judgment and may have to face other consequences of failing to appear in court.

Are There Ways to Prevent a Default Judgment in Texas?

The best way to prevent a default judgment in Texas is to show up to your court hearing. According to the Federal Trade Commission, about 60-95% of debtors don’t show up to the court hearing, thus resulting in a default judgment that could’ve been easily avoided. You can also challenge the lawsuit, simply requiring the creditor to prove their case. The creditor may not have the evidence to prove their case, and there’s a chance the case may be dismissed as a result. If they can’t prove they legally own the debt, then you may not be legally obligated to pay.

What Happens After a Default Judgement Is Issued?  How to Deal with a Default Judgment?

It can be hard to find your way out of a default judgment if one is ruled against you, but it’s not entirely impossible. There are a few things you can do to get out of one.

You May Be Able to Vacate the Judgment

In Texas, you could possibly motion for a new trial if you can prove you weren’t informed of the original hearing, or if you had excusable neglect or “good” excuse for not showing up. However, you must file this motion with the court clerk within thirty days if you want a chance at vacating the judgment.  This is also referred to as setting aside default judgment.

If you did appear at the original hearing and fought against the plaintiff, but lost, then you’ll likely be denied for another trial. If that isn’t the case and the motion is granted, then you have another shot at getting the judge to rule in your favor.

File for Bankruptcy

While bankruptcy may be seen as a more “extreme” route to take, it can often be favorable to financially ruining yourself due to being unable to pay the creditor. A bankruptcy can essentially wipe away your debt, and/or put a pause on the lawsuit if it hasn’t been settled yet. Even if the lawsuit has already been ruled against you, the bankruptcy will likely overrule the judgment.

There are a few things a bankruptcy won’t erase though, such as student loans, child support, or criminal charges.

Claim Property as Exempt

Under the Texas Constitution, some property or items can be claimed as exempt from seizure or liens. This will essentially prevent your property from being seized due to a judgment. It’s important to hire a judgment liens lawyer for this process. Types of exempt property include:

• Primary residence
• Entire value of a motor vehicle
• Family cemetery plots
• $50K worth of individual, personal property
• $100K worth of family property
• College funds
• Retirement funds

Settle for Less

You can settle out of court with a creditor for less than what you may have to pay if the judgment was ruled in the creditor’s favor. Even if the judgment has already been made, a lawyer can try to negotiate with the creditor for you. They will know the correct steps to take and can properly assess the amount due in the court order while taking into consideration how much money can actually be paid. By having them contact the creditor, an offer can be made, negotiation can be arranged, and a settlement can be drawn up that may be satisfactory to you, or at least more affordable than the previous judgment.

Be Careful For Of Wage Garnishments

Once you have a Judgment issued against you, the judgment creditor can file a complaint known as a writ of garnishment that can be used to withdraw money from your bank account to pay the judgment.  This can be a devastating experience for a judgment debtor as the money that gets levied from their bank account could be the money they need to pay their rent or buy groceries.  So this is a very important reason to not ignore a Judgment.

Do I Need a Lawyer to Vacate a Default Judgment?

While not legally required, it’s highly recommended to hire a lawyer to vacate a default judgment. Lawyers are experts in the legal field, and they’ll be more likely to pursue the situation in a way that’s favorable for you. A lawyer can help you gather and put together information and evidence pertaining to your case, and they can give you the advice you need to win. As they say, a little advice can go a long way!

Hiring a lawyer is always in your best interest when it comes to legal battles, and a default judgment is no exception. Seeking legal advice is better than trying to tackle the task on your own, especially if you’ve never dealt with anything similar before. If you live in Texas, consider contacting us at Warren & Migliaccio, LLP. We’ll do our best to provide you with the legal help and advice you need.