What is a Judgment in California
Who can obtain a judgment on debt that is not paid and what the debtor can do to remove the lien.
What is a judgment?A judgment is a Court signed document stating you owe a debt. A judgment’s purpose is to allow creditors to collect their debt. This occurs when a creditor goes beyond merely typical collection attempts of phone calls, emails and letters.
Who can obtain a judgment?Credit card lenders, vehicle lenders, private lender or mortgage lenders who seek money that has not been paid. For these creditors to get a judgment, they typically are required to file a lawsuit and obtain an order to get their debts paid. When a lawsuit is filed, you will receive notice (summons and complaint) stating that you have been sued. This notice tells you to take action and what you can do to prevent a judgment. Failure to take action will result in an automatic win for the creditor, and the Court may issue a judgment against you.
How does a Judgment affect you?Since a judgment is public record, it will appear on your credit report and can significantly lower your credit rating. In California judgments last for a period of 10 years and varies by state. Creditors may also renew the judgment near its expiration date.
Also a lien allows a creditor to collect from your wages and collect what it is owed from your bank account.
How to remove a lienIf you have a judgment lien recorded against any property that you own, filing for Chapter 7 or 13 bankruptcy may be a way to get rid of them.
If you meet the following three (3) conditions, you may be eligible to remove the judgment liens on your property:
(1) The lien was the result of a money judgment that was issued by a court.
(2) The property is your personal residence, and you qualify for an exemption.
(3) The property is worth less than the total of all mortgages on the property and your exemption of $600,000.00 (in California).
If you can avoid a lien, you should do it. It eliminates the requirement of paying that lien(s) and dealing with them in the future when you consider a refinance or sale of the property.