Judgments and Garnishments
A judgment refers to a decision by a court that has been entered into the public record. Before a judgment can be issued, a lawsuit must be filed against you. If you do not file an answer to the lawsuit within the time period required by law (usually 20 to 30 days after service of the lawsuit on you), the plaintiff can ask the judge to issue a “default judgment.”
Once a creditor has obtained a judgment, the now judgment creditor then has to collect on that judgment against the judgment debtor through various means. The judgment interest rate in Maryland is 10%, so the balance can grow quickly. If a judgment has been issued against you in a collection case, your creditor becomes a secured creditor instead of an unsecured creditor. Secured creditors have more rights than unsecured creditors.
Requests for Information
The judgment creditor can serve written interrogatories, depositions, requests documents, and order the judgment debtor to appear in front of a judge to answer questions about their finances.
After a judgment is obtained, a lien may be placed on any real property the judgment debtor may own. If the homeowner wants to refinance or sell the home, the judgment lien must be paid. This lien will encumber your property and will need to be paid before you can sell your real property.
Another often used method to collect on a judgment is through a wage garnishment. They can garnish 25% of you net wages (what’s left after taxes, insurance and other mandatory deductions)
Bank Account Garnishment
After a judgment is entered, a writ of garnishment to a financial institution such as a bank to seize funds that are in a bank account owned by the judgment debtor. The bank will freezes the bank account and then send funds to the creditor who has the judgment.
Writ of Execution – Levy
A judgment creditor also has the power to levy against real or personal property. The judgment creditor can ask the clerk of court to issue a writ of execution directing the sheriff to levy on property of the judgment debtor. The sheriff can then remove the property from the premises.
Sale of Property Under Levy
Once property has been levied by the sheriff, the judgment creditor can request that the property be sold by the sheriff. In other words, the sheriff sale is the enforcement of a judgment for a debt owed by the property owner.