Has a Default Judgment Been Entered Against You? If so, here’s what to do

Where do default judgments come from?

Often, the default judgment is a key tool of a debt buyer. A what? Debt buyer. Here’s how it works.

Debt buyers are companies that buy past-due debts from creditors. They are buying the debt, which includes the legal right to collect the creditors’ past due accounts and to file a lawsuit against the debtors.

This means that if you have a past-due balance owed to a credit card company, the company could package your past-due account with many others and offer them for sale. Depending on the age of the debt, the debt buyer typically pays between 3 and 16 percent of the debt’s face value. Then the debt buyer often sues you, hoping to get you to pay money on your debt.

If the debt buyer files a lawsuit against you, and if you do not file a written answer to the lawsuit within the time allowed (usually 20 to 30 days), then the debt buyer can get a default judgment against you. Many debtors do not answer a creditor’s lawsuit, which results in a lot of default judgments against many debtors. Here’s one catch: If you allow a default judgment to be entered against you, then the debt buyer has the legal right to garnish your wages and bank accounts.

Often, debtors who get served with a lawsuit don’t know what to do, so they sit back and do nothing. Also, a debt buyer can serve a defendant by mail, which means he mails a lawsuit to the debtor. And, many times, the mailing address is wrong, so the defendant never receives the complaint and summons.

If a Default Judgment Has Been Entered Against You, Here’s What You Can Do

1. Ask the court to “set aside” the default judgment and allow you to contest it. Or
2. You could settle the debt with plaintiff for an amount less than the default judgment.
3. You could completely erase the default judgment by filing bankruptcy.

Petition the Court to Quash the Default Judgment

If you think that the default judgment was entered into in error, or that it should not have been entered against you, then you can ask the court to quash the judgment and give you the opportunity to fight the lawsuit. But the Court must have good reason to set it aside.

By the time you reach this step, you should have contacted a lawyer familiar with consumer debt defense. If appropriate, he will file a petition with the Court asking it to set aside the default judgment.

Please don’t delay. Time is important and the court may require that you file your request within a certain period of time. This is another reason to ask a financial rescue lawyer to represent you.

Settle the Judgment

If asking the court to set aside the judgment is not an option or if it doesn’t work, then you could always contact the plaintiff and see if you can reach a settlement. Since the debt buyer has already sued you and won, you may have a hard time getting him to settle for anything less than the amount in the judgment.

You may be able to get the debt buyer to agree to a payment schedule that you propose. Or you may suggest a lump sum down payment and then the balance paid over a few months.

File for Bankruptcy

Bankruptcy will erase the default judgment and most of your other bills as well. So whether your bankruptcy attorney recommends that you should file for bankruptcy depends on a number of factors beyond this one default judgment.

It is possible to get a default judgment set aside, but it isn’t easy. Start by talking with a bankruptcy lawyer so you know your legal rights. If you have questions about a default judgment or other debts, you’re welcome to contact me for a confidential consultation, no charge of course. I can help you avoid costly mistakes, and tell you the most effective way to keep your assets and get rid of your debts.

Richard Fonfrias is a financial rescue and bankruptcy expert with many years of experience aiding those with serious money problems. Rich Fonfrias provides legal services in Illinois, including financial rescue, loan modification services, mortgage repair, credit repair, tax reduction and tax lien services, bankruptcy avoidance and foreclosure avoidance. Let Chicago bankruptcy lawyer Rich Fonfrias work with you to help build a brighter financial future for you and your family, with effective legal strategies that will improve your financial health and solve your financial problems.