What Happens if a Creditor Gets a Judgment Against Me?

If you're behind on a debt and your creditor sues you, ignoring the lawsuit can lead to serious consequences. A court might give the creditor a judgment — a legal decision that says you owe the debt. With that judgment, the creditor can take steps to collect the money, including taking money directly from your bank account or paycheck.

In this article, you’ll learn how judgments work, what they allow creditors to do, and what options you may want to explore if you’re facing one.

What Is a Judgment?

A judgment is a court order saying you legally owe a debt. If the creditor sues you and wins, the court gives them this judgment. Once that happens, they can take steps to collect what you owe.

When a judgment is in place, the creditor is often called a judgment creditor.

The person who owes the debt is called a judgment debtor.

What Can a Creditor Do With a Judgment?

Once a creditor has a judgment, they can ask the court for permission to collect the debt by:

• Freezing your bank account: Also called a bank levy, this allows a creditor or debt collector to take money directly from your bank account.

• Garnishing your wages: This allows a creditor to take money from your paycheck.

• Putting a lien on your property: This is a legal hold on assets you own like a car or home.

Most creditors try to collect in the easiest and fastest way possible. Taking property is usually a last resort because it’s time-consuming and expensive.

Can You Settle After a Judgment?

Many people choose to settle with the creditor after a judgment. A settlement is an agreement to pay a lower amount than what you owe. Creditors often accept settlements to avoid long collection efforts or the risk that you might file bankruptcy and they don’t get paid at all.

Settling can help stop garnishments or levies before they start.

Want to settle your judgment without going to court or speaking directly to the creditor? SoloSettle is a tech-powered tool that helps you negotiate a debt settlement and avoid garnishments or levies. It’s fast, secure, and backed by a money-back guarantee if your offer isn’t delivered.

If the Judgment Came From Another State

If you moved states to avoid a judgment, it likely won’t work. Creditors can register their judgment in your new state. This is called domesticating a foreign judgment. Once they do that, they can start collection efforts just like if the judgment happened locally.

If the Judgment Came From Arbitration

Some loan agreements require you to go through arbitration instead of court if there’s a dispute. If the arbitrator decides you owe the money, the creditor can ask a court to enforce that decision by turning it into a judgment.

What Is Post-Judgment Discovery?

After the court issues a judgment, creditors can ask for detailed information about your finances. This is called post-judgment discovery. They might send written questions (called interrogatories), request documents, or even ask the court to make you appear in person to answer questions.

It’s important not to ignore these requests. Failing to respond could lead to serious consequences, including being held in contempt of court.

Wage Garnishment: What To Know

Wage garnishment is when a creditor takes a portion of your paycheck directly from your employer.

Under federal law, they usually can’t take more than:

• 25% of your disposable income, or the amount your weekly pay exceeds 30 times the federal minimum wage — whichever is less.

Disposable income means your paycheck after legally required deductions like Social Security and taxes.

Some types of debts, like unpaid taxes or child support, can result in higher garnishment amounts. Also, federal benefits (like Social Security) are usually protected, but there are exceptions.

What Is a Bank Account Levy?

A bank levy lets a creditor take money straight from your account. If they do this, you may not even get a warning.

Some income is protected from levies. For example, federal benefits like Social Security usually can’t be taken. But if you mix that money with other income in one account, the bank may not be able to tell which money is protected. To help avoid this, some people choose to keep federal benefits in a separate bank account.

Each state also has its own exemption laws, so it's a good idea to check what’s protected in your state.

Can a Creditor Take Your Property?

If the debt isn’t paid, the creditor might be able to take non-exempt property, like a car, business equipment, or even your home. But they need a court order called a writ of execution to do that. Then, law enforcement (usually a sheriff) can help seize and sell your property.

You may still be able to keep your property if it’s protected under state exemption laws. If you think the property is exempt, you can file a claim of exemption with the court. This may lead to a hearing where you explain why the creditor shouldn’t be allowed to take it.

Can They Take Your Home?

In some rare cases, yes. But this is very uncommon.

Most states have a homestead exemption that protects a certain amount of equity in your home. If the amount you owe is less than what’s protected, the creditor usually can’t get anything from the sale, so they may not even try.

For example, let’s say your home has $70,000 in equity, and your state’s homestead exemption protects up to $75,000. That means your home is fully protected from creditors with a judgment.

What Is a Judgment Lien?

A judgment lien is when a creditor places a legal claim on your property. This gives them the right to collect from the sale of the property if you try to sell or refinance.

Laws about liens vary by state. In some places, liens only apply to real estate. In others, they can apply to personal property, too.

Liens usually last for a certain number of years — often 10, 12, or even 15 years — and can sometimes be renewed.

Once you pay off the judgment, the creditor should file a satisfaction of judgment to remove the lien.

Can Bankruptcy Stop a Judgment?

Yes, filing bankruptcy can stop collection actions — including wage garnishments, bank levies, and property seizures.

This is thanks to something called the automatic stay. This is a legal protection that goes into effect as soon as you file your case. It forces most creditors to pause all collection efforts while your bankruptcy is being processed.

If you're already dealing with a frozen bank account, a paycheck that's being garnished, or the threat of losing property, this can offer immediate relief. Many people also use bankruptcy to erase debts that led to judgments in the first place — especially credit card debt, medical bills, and personal loans.

Whether bankruptcy can help you depends on a few things, like what kind of debt you have and what type of bankruptcy you file. For folks with low income and mostly unsecured debt, Chapter 7 bankruptcy is often the fastest and most affordable option.

If you have a simple Chapter 7 case, Upsolve may be able to help you file for free. Upsolve is a nonprofit that helps people who can’t afford a lawyer get a fresh start through bankruptcy. It’s designed to make the process easier and less stressful — especially if you’re handling it on your own.

Upsolve has helped 17,000 people get rid of over $700 million in debt, and our services are 100% free.