What is a Judgment Debt?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 27 January 2020
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Judgment debts are debts that have been reviewed by a judge in a court of law, and found to be valid. The judge rules in favor of the creditor or lender, and orders the debtor to pay the amount specified by the court to the winner of the lawsuit. While a bad debt judgment of this type does further limit the ways by which a debtor can settle his or her debt, there are still a few strategies to deal with judgment debt without having to appear before the judge for a second time.

Often, when a judgment debt is rendered, the judge hearing the case will also specify the different strategies that the creditor can use to collect on the debt. The action often grants the right of the creditor to initiate garnishment of the wages of the debtor, with a percentage of the debtor’s net pay withheld by the employer and forwarded either to the court or directly to the creditor. The maximum percentage of wages that can be withheld for this purpose varies from one jurisdiction to another, with most countries allowing a maximum of twenty-five percent of the net paycheck going to satisfy the garnishment action until the entire debt is retired.


A second possible way to collect on a judgment debt involves the imposition of a lien. In this scenario, the court allows the creditor to obtain a lien against some form of real property that is owned by the debtor, such as a vehicle or a house. Depending on the circumstances surrounding the debt, the judge may require that the property be sold, and the judgment debt retired using the proceeds from the sale.

The imposition of a levy is also a possible means of settling a judgment debt. Here, the judgment creditor has the right to seize cash from different deposit accounts held by the debtor as a means of settling the outstanding debt. The action can be conducted without any prior notice to the debtor, as long as the proper legal documents are presented to the bank or other financial institution where the accounts are established.

It is important to note that once a judgment debt is granted, that does not mean that collection processes will begin immediately. A judgment of this type normally allows the creditor a time frame in which to begin the collection process. If necessary, the creditor can apply for an extension to this time frame. For this reason, a debtor should take action immediately after the judgment is granted, and attempt to work out terms of repayment with the creditor. This move can prevent the need for more legal action, and also allow the debtor to begin rebuilding his or her damaged credit.


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