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A judgment debtor is someone who has lost a court case and is ordered to pay damages. As soon as the court has ruled in the case, the judgment debtor becomes liable for the damages ordered by the court. Failure to pay the damages can result in legal penalties. Historically, debtors could potentially be imprisoned for failure to abide by judgments, and while this practice no longer occurs today, creditors are allowed to take a variety of steps to recover the monies they are owned.
The person who wins the case is known as the judgment creditor. Once damages are awarded to the judgment creditor, she or he has the right to recover them, and if the judgment debtor does not pay them, the creditor can initiate proceedings to take them by force. The court may assist with this process, depending on the situation, and if there are multiple creditors, the court may step in to determine who is first in line and to ensure that people recover as much as possible.
Once damages are awarded, the best thing to do is to pay them as quickly as possible. If a judgment debtor cannot pay the damages in full, she or he can approach the judgment creditor to ask about options, such as paying on installment. Taking the initiative and indicating a good faith desire to pay can help people avoid legal penalties. Many creditors are willing to negotiate payment plans with people who are honest about their inability to pay and who develop a proposed payment plan which seems reasonable and fair.
If a judgment debtor doesn't pay, the judgment creditor may place liens on the debtor's property, or confiscate it, depending on the situation. The judgment is also reported to credit agencies, and the nonpayment will show up as a black mark on the debtor's record. This will make it difficult to obtain credit, and can also have a negative impact on things like applications for housing.
There may be cases in which a judgment debtor is simply unable to pay at all. Such debtors may opt to declare bankruptcy to erase their debts and start over. This step is generally recommended as a last resort only, because it will generate a negative credit record and can cause hardships with opening bank accounts and engaging in financial transactions. A lawyer can provide more specific advice for someone who is considering bankruptcy.
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