If a judgment is issued against you over a debt claim, your life can be impacted substantially because what was an uncollectable amount of money suddenly becomes a collectible amount of money, often with interest and attorney fees on top.
In the past, judgments were only issued by the courts after a debt collection lawsuit is filed against you. If you ignored the lawsuit or failed to respond to it, the courts would enter an automatic judgment against you, which is also known as a default judgment.
Online arbitration has changed the judgment game
But things have changed. The US legal system now recognizes online arbitration as a legally binding alternative to traditional lawsuits.
Online arbitration is a form of online dispute resolution (ODR).
Its popularity has soared because the costs of filing an online arbitration claim are up to 70 percent cheaper and 80 percent faster than traditional litigation in a court of law.
Before ODR became a thing, businesses often left money on the table because the monetary return associated with debt lawsuits was pennies to the dollar, making it not worth the time or effort to pursue.
But now more and more businesses are turning to ODR because it is cost-effective, painless, and super-efficient.
Online arbitration platforms such as Brief allow claimants to file a claim by simply uploading document-centric evidence.
If you default on the claim or lose the claim, an E-Judge will issue an Award against you, and the claimant can then file it in the local court to convert it into an enforceable judgment.
How long does it remain valid if a judgment is issued against you?
Depending on which state you live in, a judgment against you can remain valid for between 5 and 20 years, which is a long time for debt to follow you around and affect your life.
Judgments show up on credit reports for up to 7 years, meaning that you may struggle to get a loan, mortgage, or any other sort of finance. It even impacts your eligibility for a credit or store card.
An outstanding judgment can disrupt your finances badly, and it can even prevent you from obtaining things we take for granted, such as insurance or renting an apartment.
Judgments also show up on background checks meaning that it may affect your ability to find a job.
How do I stop a judgment from affecting my life in this way?
The quickest way to stop debt from taking over your future is to settle the claim. Just like in a traditional lawsuit, Brief allows defendants to settle. When a claim is filed against you, we approach the claimant and ask them for their settlement terms.
When the process kicks off, we will also give you, as the respondent, the opportunity to settle.
If your settlement offer does not match the terms put forward by the claimant, we will still present them with your offer.
The claimant may also offer you to pay off the debt under a debt payment plan. If both parties agree to the settlement, the arbitration process is stopped dead in its tracks, no Award will be issued and therefore, no judgment will be issued against you.
But what if I don’t want to settle and the claimant prevails?
A creditor can use a judgment against you in various ways. Under state law, a judgment is a lien on the property. If you have defaulted on a debt claim and a judgment is issued against you, it becomes a lien on your personal property, including your home and debt collection agencies can force a sale.
A lien is a legal right against assets that can be used as collateral to collect the debt. In simple terms, this means that a creditor may seize your assets to the lien to satisfy your debt obligations.
If you own real estate, the creditor can present the judgment issued against you to the local sheriff, instructing them to seize and sell your property.
Put simply, a judgment against you could mean that you are forced to sell your home or other property to satisfy your legal obligations.
In some states, creditors may force the sale of your home. As a minimum, the judgment is entered into the system and will appear in your county’s property records, meaning that if you sold or refinanced a mortgage on your property, it would require that the judgment be paid off in full from the proceeds of the transaction.
Can they really come and take my television?
Yes. A creditor can present the judgment against you to the local sheriff, instructing them to seize and sell your property. This is called a writ of execution and can be quite traumatic. The experience of having a deputy knocking on your door, handing you a piece of paper and seizing your car, TV or vinyl collection, is certainly not pleasant.
The fact that these items will be sold at below-par value makes the process even more painful.
What about my wages and bank accounts? Can they touch them?
If the state you live in allows it, a debt collector or creditor can freeze your bank accounts or file a levy with your employer to garnish your wages to pay off your debt. You will be left with some money to live on and the amount depends on the state you live in.
Pension benefits, social security, disability payments, workers’ compensation and unemployment benefits cannot be garnished for private debt.
What type of businesses use ODR to reclaim debt?
Your business can recover debt without going to court. Brief has helped businesses across the United States recover debts that were simply not worth the cost of traditional litigation or arbitration if not for online dispute resolution.
Satisfied participants include electronic commerce sites, factors, banks, MCA, and other lenders.
Brief also handles quiet title, warranty claims, and other declaratory relief actions as well as other types of monetary disputes.
Our screened network of Ejudges spreads across all 50 states and each case is matched to jurisdiction and subject matter expertise of the E-judge.
Brief is a market-leading online arbitration platform in the United States. Our 100 percent online alternative dispute resolution platform helps businesses protect their contracts and agreements through online arbitration. Follow us on LinkedIn or Facebook for updates and news about online arbitration and more.
*Brief cannot and will not give legal advice on any matters, financial or not.