Creditor Judgments: What You Need to Know

 Posted on May 26, 2014 in Bankruptcy

One of the greatest fears people have regarding bankruptcy is due to the overall negative stigma associated with filing. Another reason for the apprehension is not knowing exactly when the right time is to file for bankruptcy. And often asked is the question, “Is it ever too late to file bankruptcy?”

The short answer is no. However, according to some experts, you will want to file before your rights are taken away because of a judgment.

A creditor has the right to take you to court for any unsecured debt. An unsecured debt is one that does not have an item of collateral attached to it such as a house or a car. This may be for a loan, or even a credit card. Once the creditor wins the case, you will then have a civil judgment against you and a new negative mark on your credit.

The creditor can collect on the judgment in several ways:

• Federal law says that the creditor can take 25 percent of your wages after taxes. There are state regulations in some states that dictate a lower amount. The creditor can continue to garnish your wages until the debt is satisfied.
• The creditor can place a lien on your real property such as your house or car. When you sell that real property, the creditor gets paid from the proceeds.
• The creditor may also be able to place a levy on your fiduciary accounts. This means they can take cash from your bank accounts. They can even levy your real property to be sold at an auction.

In order to avoid a post judgment debt, you will want to file for bankruptcy before it gets to that point. One of the things that cannot be removed from your credit report is a civil judgment. In this case, waiting too long can make your credit issues worse. If you have questions about filing bankruptcy, call a Texas bankruptcy attorney today.