The Truth About Default Judgments: What You Need to Know

Imagine receiving a notice in the mail stating you’ve been sued. Maybe you forgot about it, or maybe you thought it wasn’t serious enough to attend court. Whatever the reason, you missed your court date. What happens next? You’ve just been hit with a default judgment—a legal decision made in favor of the plaintiff simply because you didn’t show up. But here’s the kicker: the consequences can ripple through your financial life in ways you never expected.

Let’s pull back the curtain on default judgments. What are they really, and what tools do creditors use to collect on them? Here’s the lowdown, broken into digestible chunks that even your stressed-out, post-lawsuit self can follow.

What Is a Default Judgment?

A default judgment occurs when you fail to respond to a lawsuit or don’t appear in court. Essentially, the court assumes you don’t have a defense, so the plaintiff (often a creditor or debt collector) automatically wins. Sounds straightforward, right? But the aftermath is anything but simple.

Once a default judgment is issued, creditors have the legal backing to pursue various means of collecting what you owe. Think of it as the green light for aggressive recovery tactics.

6 Common Tactics Creditors Use to Collect Debts After a Default Judgment

1. Wage Garnishment

This is probably the most well-known consequence. Creditors can legally intercept a portion of your paycheck before it even reaches your hands. Imagine working hard all week, only to see a chunk of your earnings vanish before you even get to use it. Frustrating, isn’t it?
Good to Know: Some states cap the percentage creditors can garnish, giving you a small cushion of protection.

2. Bank Levies

Ever opened your bank app and noticed your account is frozen? This could be due to a bank levy. Creditors can legally seize funds directly from your account to cover the debt. However, here’s a silver lining: certain funds, like Social Security benefits or unemployment, are usually exempt from garnishment for private debts.
Pro Tip: Always keep essential funds in accounts that are legally protected.

3. Writ of Execution

This isn’t just legal jargon—it’s a court order that allows law enforcement (think sheriffs) to seize and sell your property. Yes, that means anything from your flat-screen TV to a car could be on the chopping block. It’s dramatic, but it happens more often than you’d think.

4. Tax Refund Intercepts

Picture this: You’re waiting for that sweet, sweet tax refund only to find out it’s been redirected to pay off your debt. The government can intercept your refund, leaving you with nothing. If you were planning to use that refund to catch up on bills or splurge a little, think again.

5. Stimulus Payment Intercepts

This one gained attention during the pandemic when stimulus checks were lifelines for many. If you had outstanding debts, creditors could intercept these payments—specifically the third stimulus check—to settle what you owe. It’s a harsh reality in desperate times.

6. Property Liens

This tactic is more long-term. Creditors can place a lien on your real estate, meaning you can’t sell or refinance it without paying off the debt first. While this doesn’t mean you’ll lose your home right away, it certainly ties up your financial freedom until the debt is cleared.

Can You Fight Back?

The good news is, even after a default judgment, you’re not entirely out of options. Here’s what you can do:

Request to Vacate the Judgment: If you had a valid reason for missing court (like an emergency), you might be able to get the judgment overturned.
Negotiate with Creditors: Sometimes, creditors are open to settling for less than the full amount, especially if you can pay a lump sum.
Seek Legal Advice: An attorney specializing in debt defense can guide you through the process and potentially uncover legal errors in the judgment.

Final Thoughts

Default judgments are serious, but they’re not the end of the world. The best defense is being proactive—responding to lawsuits, showing up in court, and knowing your rights. If you’ve already been hit with a default judgment, understanding the tools creditors can use against you is the first step in regaining control.

And remember, financial hardships happen to the best of us. What matters is how you bounce back. You’ve got options—use them.