Defend yourself against debt judgment

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Dear Debt Adviser,
How are judgments against a debtor enforced? Can an unsecured creditor take my pension? Can that unsecured creditor take my house?
— Tony

Dear Tony,
Judgments! The term is so … judgmental.

And then, there is the “Last Judgment” mural by Michelangelo. I saw the original in Rome a few years back and I can say it was certainly intimidating — all that looking up hurt my neck.

Judgments regarding debt also are intimidating and a pain in the neck. They usually come at the end of a long road of debt collection activities by a creditor.

To be granted a judgment, a creditor must appear in court and present the judge with information regarding the debt owed. If the judge agrees the debt is valid, the creditor is granted a judgment in the amount owed.

A judgment in and of itself has no teeth until the creditor solicits and receives a judgment execution order from the court. A judgment also appears as a hefty negative item on your credit report and lowers your credit score.

Armed with the execution order, the creditor can garnish wages, place a lien on real estate property or seize personal property. The laws vary by state regarding which personal property is exempt from seizure. But federal laws limiting the amount of money that can be garnished from wages supersede state laws if they provide a lesser benefit.

Generally speaking, retirement benefits — including pensions and Social Security benefits — are exempt from judgment execution.

To receive full answers to specific questions about your pension and home, contact an attorney familiar with judgment executions, and state and federal exemptions pertaining to them. However, I can offer some general advice.

First, ALWAYS go to court to defend yourself against the creditor seeking a judgment. The creditor is required to give you advance notice of the court hearing so you can appear and give the court your side of the story.

I also recommend that you hire a lawyer to represent you in court.

Yes, you can go into court and represent yourself, but only a fool would do so. You will be at a significant disadvantage not knowing the process, procedures or maybe even where to find the courtroom.

If you can’t afford an attorney, try a legal aid organization or ask your local bar association to recommend a pro-bono lawyer. No, this is not a lawyer who likes U2 singer Bono; this is a lawyer who will represent you for free as an act of goodness.

Many lawyers think pro-bono work may help them during that “last judgment” in the sky. Knowing lawyers, they can use all the help they can get.

Second, I sympathize with worrying about your pension and home. But worrying is a waste of time. I find I worry a lot less if I am working on a solution to a problem and not playing the hopeless and helpless consumer.

If you have a debt on its way to a judgment, try to work out a payment plan with the creditor.

If the creditor can’t or won’t agree to your best offer, try getting a legitimate nonprofit credit counseling agency to make a pitch for you. The agency may succeed where others fail because it has pre-existing agreements with many creditors for workout programs that may not be available to a person off the street.

Lastly, if you are currently on a fixed income and are using credit to extend your income, stop! Immediately determine the best way to decrease expenses so you are not spending more than you bring in each month. The credit counseling agency can help, usually for free.

I’m going to send you a copy of my recently updated book “Credit Repair Kit For Dummies,” which has a chapter titled “Getting the Best You Can From Collectors, Lawyers and the Courts” and another titled “Making Bad Credit and Debts Behave.”