Recently, I have received several questions regarding judgments from consumer and/or debtors. Of course, with the recent downturn in the economy more and more consumer debtors are being sued by creditors and/or debt collectors. In response to these questions, I just wanted to give a brief introduction to help answer some of the more common questions that I receive.
Question 1: What is a judgment?
Answer: A judgment is basically a ruling from a court finding that a debtor is obligated or liable to pay a creditor for an amount determined by the court. A judgment is a civil obligation to pay. A debtor can not be placed in jail/prison for failing to pay a debt or judgment. Even when a creditor obtains a judgment against a debtor, the creditor has to properly execute and enforce the judgment against the debtor.
Question 2: What methods can a creditor use to enforce a judgment?
Answer: There are several different methods that a creditor can use to enforce a judgment against a debtor. The most common methods include, garnishment, attachment, judgment lien against real property, sequestration, writ of execution, and repossession of secured property.
Question 3: What types of property can a judgment creditor execute against a debtor?
Answer: In Texas, property for collection purposes is placed into two (2) primary categories, exempt or nonexempt property. Exempt property is debtor property which is protected from actions by a creditor. In other words, exempt property cannot be seized by a creditor regardless of whether they have obtained a judgment against the debtor. Texas is considered to be a very debtor friendly state thus, Texas allows for a greater amount of property to be exempted under Texas law compared to other states. See Sections 42.001 & 42.002 of the Texas Property Code for a list of exempt property. The most common and greatest exemption here in Texas is the homestead exemption.
Non-exempt property is debtor property which is not protected, and thus can be seized by judgment creditor. Generally, the following types of property are non-exempt:
cash;
checking/savings accounts;
CD’s, Bonds, Notes, Stocks, and other types of investments;
Rental Property or Vacation Property not designated as homestead property;
Pleasure Boats;
Collector Items; and
Airplanes.
Question 4: What is the statute of limitations for a judgment?
Answer: Generally in Texas, a properly executed and recorded judgment lien will last for ten (10) years from the date of recording and indexing. However, a creditor can continually renew a judgment lien for another ten (10) year period, if the creditor does so before the current 10-year period expires. Thus, a creditor could continually renew a judgment lien until the judgment is satisfied.
In addition, generally a judgment remains on a consumer’s credit report for seven (7) years from the date of entry, or until the governing statute of limitations period under state law has expired, whichever is longer. Thus, if a consumer has a judgment which is satisfied/paid, then that judgment would be removed from a consumer’s credit report after 7 years from the date of entry of the judgment. However, if a consumer has failed to satisfy the judgment, the judgment could be removed after 7 years from the date of entry, or it could last continually given the the fact that under Texas law a judgment can be renewed continually every 10 years if properly executed by the creditor.
Question 5: Am I liable for the debts/judgments of my spouse?
Answer: Generally, an individual is not liable for the debts spouse. A person is personally liable for the acts of the person’s spouse only if: (1) the spouse acts as an agent for the person; or (2) the spouse incurs a debt for necessaries. Tex. Fam. Code §3.201(a). Furthermore, community property is generally not subject to a liability that arises from an act of a spouse. Tex. Fam. Code §3.201(b).
A spouse’s separate property is not subject to liabilities of the other spouse unless both spouses are liable by other rules of law. Tex. Fam. Code §3.202(a).
Unless both spouses are personally liable, the community property subject to a spouse’s sole management, control, and disposition is not subject to: (1) any liabilities that the other spouse incurred before marriage; or (2) any nontortious liabilities that the other spouse incurs during marriage. Tex. Fam. Code §3.202(b). However, the community property subject to a spouse’s sole or joint management, control, and disposition is subject to the liabilities incurred by the spouse before or during marriage. Tex. Fam. Code §3.202(c). A spouse’s interest in community property subject to joint management, control, and disposition can be reached to satisfy the liabilities of the other spouse without joinder of both spouses in the suit. Carlton v. Estate of Estes, 664 S.W.2d 322, 323 (Tex. 1983). All community property is subject to tortious liability of either spouse incurred during marriage. Tex. Fam. Code §3.202(d).
Generally, a creditor will seek to execute and enforce a judgment against the assets of a spouse in the following order:
(1) The separate property of the spouse that incurred the debt;
(2) Sole management community property, which is subject to liabilities incurred by that spouse (the spouse that owns the property) before or during marriage;
(3) Joint management community property, which is subject to the liabilities of either spouse incurred before or during marriage;
(4) Community property subject to the other spouse’s sole management, control and disposition.
Administrator Consumer Law, Consumer Resources, Judgments Consumer Law, Consumer Resources, Judgments
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