I was sued by Capital One on an outstanding credit card debt. The debt collection attorney filed a request to enter default judgment for $7000. The Court granted a judgment and I believe that they are now trying to get into our bank account. What are my options at this stage of the case? We have no real estate or assets, except for Social Security. What happens to this on our credit report if we don’t file bankruptcy and are unable to pay it?
The picture that you have painted, so far, is someone whom experienced lawyers would likely term “judgment proof,” with sufficiently low income to qualify for a Chapter 7 Bankruptcy.
Following entry of this default judgment, here are your options:
a. Promptly file motion to set aside the default judgment within the proper time limits, to be able to defend the court case on its merits. The Courts insist that the defendant file this motion soon after learning of the default judgment, if they had not been served or had actual notice.
b. May a large payment or several payments towards the default judgment, until they file a satisfaction of judgment. Borrow the settlement funds, if needed. You may should have an understanding in writing of how much in settlement payments or a fixed sum this would be, or you may end with a misunderstanding of how much it will cost to satisfy this judgment in full.
c. Do nothing, which would let them to try enforcing their judgment against whatever they can find to lien, that is not exempt, though it does appear to me that your bank account is exempt if it is only from Social Security benefit deposits.
d. File bankruptcy. If you qualify for a Chapter 7, then this and your other unsecured debts would be discharged. If you don’t qualify for a Chapter 7 for whatever reasons, then you could file a Chapter 13 Repayment Plan Petition and make payments through the trustee and pay it off over several years, interest free.
The benefits of resolving this judgment soon are that you don’t want this $7000 judgment sitting out there gaining (accruing) interest at the rate of 10% per year, which is $700 every year in your case, plus possible other costs and attorney’s fees, as applicable to the judgment.
Also, if they enforce this judgment by levying your bank account, it can be very embarrassing to have your checks bounce and to go to the store with a debt card that is refused, if they enforce a levy and the bank accepts it. You may be entitled to all your money back, by filing a claim of exemption, but having bounced checks is considerably damaging to your reputation. Plus, and unpaid judgment can be appear on your personal credit reports until paid.