The purpose behind taking another party to civil court is to obtain some sort of judgment. When a judgment involves a monetary award, it is considered a money judgment. Money judgments are sought in all sorts of cases ranging from debt collection to personal injury.
Because there are other types of judgments that do not involve monetary awards, some of the principles that apply to money judgments don’t apply to other civil cases. Here are five key things to know about money judgments, compliments of Salt Lake City, Utah’s Judgment Collectors:
Table of Contents
1. The Nature and Purpose
The nature and purpose of a judgment is pretty specific in cases involving monetary awards. By its nature, a money judgment establishes a legal debt and the debtor’s obligation to pay it. As for the purpose, it is quite simple.
In the absence of a judgment, a creditor’s collection efforts are limited. Creditors can send emails, make phone calls, and send invoices by snail mail. Creditors can do all the same things with a judgment in hand. But a judgment also allows garnishment along with the use of property liens and writs of execution – three things that are not possible otherwise.
2. Applicable to Different Circumstances
Monetary awards are applicable in a variety of different circumstances. Debt collection is at the top of the list. A creditor might sue a customer for unpaid bills. A monetary award covers those bills along with interest and fees.
Monetary awards can also be ordered as a result of contract disputes, personal injury, medical malpractice, and even faulty products. Outside of debt collection cases, monetary awards can be punitive in nature.
3. Judgment Enforcement
Next up is the fact that judgment enforcement is left up to creditors. Unlike criminal courts that get directly involved in sentencing and enforcement, civil courts do not involve themselves in collection. The only time a court acts is when additional court action is required, like approving a writ of execution.
4. Statutes of Limitation
Nearly every state has placed a statute of limitations on money judgments. Typically, it is 7-10 years. A small number of states go as low as 5 years while a few have 15-near statutes. Regardless of the number of years, a money judgment is no longer enforceable once the statute of limitations has been reached.
Fortunately, most states also allow judgment creditors to renew judgments prior to the existing statute of limitations. Renewal allows the creditor to continue collection efforts for years into the future.
Also note that some states have dormancy rules allowing creditors to temporarily suspend collection efforts without impacting the statute of limitations. One potential reason for taking advantage of dormancy is a debtor being imprisoned for a time. The judgment remains dormant until the debtor is released from prison. At that point, the creditor can file to have the judgment revived and then proceed with collection efforts.
5. Impact on Debtors
Finally, money judgments have an impact on debtors. The impact is not as serious today as it was 20 years ago, thanks to judgments no longer appearing on credit reports. But judgments are still a matter of public record.
Judgments can also lead to property liens against real estate and other debtor assets. And of course, most states allow the seizure and sale of certain types of property while a judgment remains outstanding.
Judgments involving monetary awards turn plaintiffs into judgment creditors and defendants into judgment debtors. And with a judgment in hand, a creditor has access to tools that could make the debtor’s life uncomfortable, at least until the bill is paid.
