Getting a letter from a creditor is stressful. Getting served with a lawsuit is worse.
But what happens if the creditor actually wins the case and obtains a judgment against you?
For many people, this is the point when a debt that already felt overwhelming can become a much more immediate financial problem. A judgment can give a creditor additional legal tools to collect what the court says is owed.
If you are dealing with a judgment in Maryland, understanding what can happen next — and getting legal advice before your wages or bank account are affected — can be critical.
What Is a Judgment?
A judgment is a court order establishing that money is owed.
Once a creditor obtains a judgment against you, the creditor may take additional steps to enforce it if you do not pay the judgment or reach an arrangement to resolve the debt.
According to Maryland Courts, these collection methods can include:
- Garnishing your wages
- Garnishing your bank account
- Placing a lien on property
- Seeking information about your employment, income, assets, debts, and expenses
A Maryland money judgment generally lasts for 12 years and can be renewed for another 12 years.
That means ignoring a judgment does not necessarily make the problem disappear.
Can a Judgment Affect Your Paycheck?
Yes.
A judgment creditor can request that your employer withhold part of your wages to pay the judgment.
Maryland Courts states that a creditor generally may not garnish more than 25% of your wages per pay period, subject to applicable protections for people earning minimum wage or near minimum wage. Wage garnishment can continue until the judgment is paid in full.
For someone already struggling to cover rent, mortgage payments, utilities, groceries, transportation, and other expenses, losing part of each paycheck can make an already difficult situation much harder.
And this is one reason timing matters.
If you are already facing a judgment and believe wage garnishment could put your household finances at risk, it may be worth discussing your legal options before the situation becomes even more difficult.
Can a Creditor Take Money From Your Bank Account?
A judgment creditor may also pursue a bank garnishment.
When a bank garnishment is served, the bank can freeze money in the account up to the amount permitted by the garnishment, including applicable costs and interest. Maryland Courts explains that money deposited into the account, including direct deposits, can also be subject to the garnishment up to the applicable amount.
This can create an especially difficult situation when the account contains money you need for ordinary living expenses.
Maryland law also provides certain protections and exemptions for some funds. For example, Maryland Courts explains that an automatic exemption of $500 applies to bank accounts, and additional exemptions may be available depending on the circumstances and source of the funds. Some protected sources can include certain Social Security benefits, veterans benefits, child support, public assistance, qualified retirement benefits, workers’ compensation, and unemployment insurance.
If your bank account has been garnished, the deadlines can matter. Maryland Courts states that a request for certain exemptions must generally be made within 30 days after the garnishment is served on the bank.
What About Your House or Other Property?
A judgment can also affect property.
Maryland Courts explains that a money judgment can become a lien on property, depending on the circumstances and the applicable filing requirements. A lien can affect your ability to sell the property or obtain a loan.
A judgment can also potentially lead to efforts to seize property to satisfy the debt.
That is why receiving a judgment should not be treated as something you can simply put aside and deal with later.
Can Bankruptcy Help After a Judgment?
Potentially, depending on your circumstances.
Filing for bankruptcy generally triggers an automatic stay that stops most collection actions against the debtor or the debtor’s property. According to the U.S. Courts, the automatic stay generally prevents creditors from continuing lawsuits, wage garnishments, and other collection efforts while the stay is in effect, although there are important exceptions.
Chapter 7 and Chapter 13 work differently.
Chapter 7 is generally designed to provide a discharge of qualifying debts, subject to eligibility requirements and exceptions. Chapter 13 allows an individual with regular income to propose a repayment plan, generally lasting three to five years, while receiving the protection of the automatic stay.
But there is an important point to understand:
A judgment does not automatically mean that bankruptcy is your best or only option.
Whether bankruptcy makes sense can depend on the type of debt, your income, assets, property, existing garnishments, and your overall financial situation. Some debts may also be treated differently under bankruptcy law.
That is why choosing a bankruptcy chapter based on a quick internet search can be risky.
Don’t Wait Until Your Paycheck or Bank Account Is Affected
If a creditor already has a judgment against you, the situation may be further along than simply receiving collection calls or letters.
There may already be legal mechanisms available to the creditor to pursue your wages, bank account, or property.
The sooner you understand your options, the more informed your next step can be.
If you are dealing with a judgment, wage garnishment, bank garnishment, or overwhelming debt, the Law Office of Albert Coto can review your financial circumstances and explain the legal options that may be available to you.
Call the Law Office of Albert Coto at (240) 233-6816 to discuss your situation.
Do not wait until a judgment turns into a problem with your paycheck or access to your money.