Just Chatting A Bit About Judgments
Your civil case has ended and you have won (or, unfortunately, you may have lost).
A judgment has been entered. So now what happens?
In North Carolina a judgment is good for 10 years and can be renewed one time for
another 10-year period. A judgment becomes a lien against any real property
owned by the debtor (person against whom the judgment exists) and it can also
impair the debtor’s ability to obtain loans, mortgages, and other forms of credit.
Judgments often appear on the debtor’s credit report.
When a judgment is granted the creditor (the person entitled to recover money from
the debtor) is limited to seeking collection in the county in which the judgment was
obtained. In order to collect on a judgment outside of the county the creditor must
have the judgment docketed in the other jurisdiction(s) (ex: county, state, country).
The docketing process can be complicated especially when the creditor seeks to
enforce a North Carolina judgment in another state. It may be advisable to consult
a lawyer for help with this aspect of judgment collection.
Even after a judgment is in place the debtor can still enter into an agreement with
the creditor to settle the judgment for amount less than face value. The creditor is in
the driver’s seat, however, and is not required to enter into any payment agreement.
The judgment entitles the creditor to have payment in full made in one lump sum but
there are often good reasons for a creditor to accept less than face value.
The process of collecting on a judgment is called execution. In North Carolina
executions involve a judgment personally serving the debtor with a Writ of Execution
and taking steps to identify and seize money, property, and other assets that can be
used to satisfy the judgment. The law allows the creditor to obtain information and
documents from the debtor regarding the existence and value of assets that could
be used to satisfy the judgment. The creditor can even command the debtor to
appear in court at a hearing to produce documents and answer questions regarding
assets and ability to pay the judgment. A debtor may be required to produce tax
records, pay records, and other financial documents.
In North Carolina before the creditor can execute on the judgment she must serve
the debtor with notice of the right to claim certain property as exempt from any
judgment. State law designates a certain monetary value of real property and
personal property (including motor vehicles) that a debtor can shelter from being
taken to satisfy a judgment. Once a debtor is served with the notice of rights she
has 20 days to complete and return a Motion to Claim Exempt Property form to the
creditor. Failure to meet this deadline could result in a waiver of exemptions
meaning any and all of the debtor’s property is subject to being seized and sold to
satisfy a judgment.
The rules and procedure regarding judgments can be complicated. Whether you
are a creditor or debtor one of the best moves you can make is to consult with an
attorney in the early stages of the process. Ideally you should consult an attorney
either before you file lawsuit or immediately after being served with a lawsuit.