Bankruptcy expert Leon Bayer answers real-life questions.
About five years ago I moved to Nebraska from California. I just got a notice in the mail that a judgment obtained against me about 20 years ago has been renewed. It previously got renewed ten years ago. The amount now due is almost $10,000. I incurred this debt almost 20 years ago when I was 19 and have been ignoring it all these years. I just bought a house and don’t want this messing up my credit. How did the creditor find me? I spoke to a Nebraska lawyer who told me I will need a California lawyer to handle this.
What can I do?
California law provides that a judgment is enforceable for ten years. Before it expires, the plaintiff can renew it for another ten years. And then before that ten years expires, the plaintiff can renew the judgment again, for another ten years.
I assume the notice that was mailed to you came from the plaintiff. The fact that you recently bought a house might explain how the plaintiff found you.
How the Creditor Can Collect the Judgment
You can’t go into court to “fight” the judgment. It is too late for that. The judgment is valid proof that you owe the money. I expect the plaintiff (also called the judgment creditor or judgment holder) will file its judgment in the Nebraska court to obtain a “sister state judgment.” That will allow it to enforce the judgment against you in Nebraska. Enforcement may include a wage garnishment, seizure of bank accounts, and placing a lien on your house. (Learn more about the ways that judgment creditors can collect against you.)
Options for Dealing With Old Judgments
Your options are quite limited.
Attack the Judgment Creditor’s Standing
You might try to attack the judgment holder’s standing to enforce the judgment by demanding proof that it is the rightful owner of the judgment. Debt paper is bought and sold all the time. I would not be surprised if this debt has not already been sold many times over. Often the paperwork to prove the rightful ownership of the debt is inadequate or nonexistent.
However, the legal fees you would incur to do something like that may be a waste of good money. The court may rule that your time to attack the judgment’s ownership has already expired. Or, if you are allowed to make what we call a “collateral attack” on the judgment, the court might find that the plaintiff’s proof of ownership is beyond dispute.
Negotiate a Settlement
Your strategy to ignore this and refuse payment has been very successful for almost 20 years. That is, until now. If this is your only debt problem, your other option is to negotiate a settlement. Often these things can be settled for a lump sum payment of 50% or less. (Get strategies for negotiating with creditors.)
File for Bankruptcy
But if you have other troublesome debts, go and see a local bankruptcy lawyer for advice.