How To Stop A Default Judgment In Colorado
A “default judgment” happens when a defendant doesn’t respond to a lawsuit. They either ignore the deadline to respond to the lawsuit by not filing an answer to the plaintiff’s complaint, or after they file an answer, they don’t participate in the litigation.
Once a creditor gets a judgment against you, whether it is a default judgment where you failed to respond to its lawsuit, or a regular judgment after you have gone to trial with the creditor, several things can happen. Unfortunately, none of what can happen next is very good. In addition to the amount you owe on your loan or other line of credit, the creditor will also likely ask for interest to continue to accrue until the judgment has been paid in full as well as its attorney’s fees and court costs.
In Colorado, when a creditor gets judgment in county court (where actions below $15,000 are usually filed), it can immediately “execute” or take action on the judgment. If it gets judgment in district court, the creditor must wait 15 days after judgment enters before it can take any action.
If the creditor knows where you work, it can request a writ of garnishment from the court. In Colorado, this writ of garnishment requires your employer to deduct 25% of your take home pay to put toward the judgment until it has been paid in full.
If the creditor know where you bank, it can garnish or levy your bank account. Once it serves the bank with the garnishment order, it is entitled to all money that is in your account at the moment it serves the bank. What that means is that if the creditor is lucky enough to serve you on payday, it could get your entire paycheck. How will a creditor know where you bank? It will have that information if it has gotten electronic transfers for payments or if you have sent it a check from that account.
Finally, a creditor can have a transcript of its judgment recorded with the county clerk and recorder’s office where you own any real estate (even if the real estate is in another state in which it got judgment). This act places a lien on your property. In order to sell or refinance your home, you will have to take care of this debt. The one bright spot from this scenario is that you can probably settle with the creditor for less than the judgment amount at this point.
If the creditor doesn’t have your banking or employment information, it can take steps to get it. Colorado Rules of Civil Procedure allow creditors to serve interrogatories (questions) that require you to answer their questions. Creditors can also require you to appear in court to answer their questions. If you fail to appear or respond to their interrogatories, the creditor may ask the court for an order to show cause that requires you to answer why you haven’t appeared or answered their questions. In the worst case scenario, the creditor may ask the court for a bench warrant. While no one will come looking for you to arrest you, if you happen to get pulled over for a speeding ticket, you’ll be placed in jail until you answer the creditor’s questions.
How To Avoid A Default Judgment – The Golden Rule
Does A Creditor Have To Serve Me Before It Can Garnish My Paycheck?
Talk To An Experienced Denver, Colorado Bankruptcy Attorney About How To Stop A Default Judgment In Colorado
If a creditor has gotten default judgment against you and you can’t afford to have your pay or bank account garnished, consider talking to a Colorado bankruptcy attorney. Bankruptcy can stop garnishment and remove any judgment liens on your real estate.
We offer free consultations to people who are considering bankruptcy. You can make an appointment on our scheduling page.