What’s the difference between a debt and a judgment?
Knowing the difference between a debt and a judgment is important.
People will contact me and say, “Hey John, the Statute of Limitations is 6 years and I’ve got this collection lawyer trying to collect a debt from 8 years ago. Do I have a Statute of Limitations defense?”
I always have to ask them to tell me exactly what is going on so we can get the full picture.
Sometimes, people are frustrated by this. They want to be given a simple “yes” or “no.”
But before giving an answer, I need to know the context.
I ask whether this is a judgment against them or not.
They tell me that there was a judgment against them 5 years ago.
This makes a huge difference.
What is a debt?
A debt is just something where a debt collector claims that you owe them money, but this has not been “blessed” by any court.
With a debt, your wages cannot be garnished. Your bank account cannot be garnished.
The collector cannot put a lien on your property.
It is only a debt that the collector alleges you owe.
What is a judgment?
When a debt collector sues you and gets a judgment against you, this means that a judge has ruled that you owe the money.
The Statute of Limitations does not matter when it comes to a judgment.
A judgment is a piece of paper that says you owe x amount of money and that it earns a certain amount of interest every year after that.
They can take this money from you by garnishing your wages, garnishing your accounts, putting a lien on your house, or even a “share of sell” to sell your property.
There is a huge difference between a debt and a judgment.
A judgment, in essence, is a type of debt.
But when you begin receiving calls or letters about this debt, you want to make sure you know what it is.
Is it simply an old debt or is it a judgment? These are two completely different things.
Once you have determined what it is, you can make your decisions about how to proceed.
If it is a judgment, but you don’t remember the judgment, look up the details.
- When was the judgment?
- When did they say that you were served?
- How did they say you were served?
- If there is a judgment, is it too late to do something about it?
You will need to check the rules about this in your own state, but it is probably not too late to act.
In Alabama, where I practice, if you were not properly served you can attack the judgment at any point.
If it is a debt you will want to look for different information.
- Is it outside the Statute of Limitation?
- Are they still allowed to credit report on this debt?
With a debt, you might just send a dispute letter.
If the debt is past the Statute of Limitations, you may send a Cease and Desist letter.
If it is a judgment, you have got to take the right action to either resolve the judgment, settle the judgment, or attack the judgment.
The big difference between the two is that a judgment is a debt that has been created into an order by a judge.
If it is a judgment, then it is too late to argue about whether you really owe the debt.
Look at the details, know your rights, and take the appropriate action to protect yourself.
We hope this is helpful to you!
If you live in Alabama and you have any questions, feel free to get in touch with us.
We would be glad to help you in any way we can.
You can reach us by phone at 1-205-879-2447, or you can fill out a contact form and we will get in touch with you quickly.
Thanks for reading, and have a great day!