Legal Question in Credit and Debt Law in Michigan
Is it possible to fight an old judgement?
I had leased a vehicle in '98. I lost my job and could not pay the lease. The lease company told me that even if I turned in the vehicle that I would still have to pay the lease, so I kept driving the it. I was later pulled over for expired plates and no insurance, and the vehicle was impounded. I did not have the money to recover the vehicle, so I assumed the lease company would be informed and reclaim it.
I did not hear anything else about this old debt until recently. A debt collector had acquired this old debt and was awarded a default judgement against me in '04 for approximately $13,000. I had never received notice of the hearing in which this judgement was rendered, so had no opportunity to defend myself. I found out about this in August when funds from my checking account (just a couple of hundred dollars) were put on hold by a non-periodic garnishment. I filed an objection to this garnishment, but the judge would not listen to my objections to the original judgement. He told me I would need to fight that judgement through an objection to that original case, and not the garnishment which he considered to be properly executed.
Can the original judgement from '04 be fought and overturned?
My current situation is that my income is just enough for my girlfriend and I to survive. I had started to rebuild my credit about a year ago, and now have a few credit cards with low credit limits. My credit score is on the border between poor and fair (around 600). I own no assets of significant value. I have no vehicles in my name, and I rent the home in which I live. With the value of homes being so low at this time I was hoping to purchase a relatively cheap home (30k - 50k) in the very near future, but this probably won't be possible if I file bankruptcy or have to deal with garnishments. The payments on such a home would actually be cheaper than continuing to rent.
Would I be better served fighting this judgement, filing for bankruptcy, or attempting to make payment arrangements with the debt collector?
With bankruptcy costing about $1200 to file, why should I consider paying the debt collector much more than that in a payment arrangement?
1 Answer from Attorneys
If you never received a copy of the Summons and Complaint, it is possible that you can fight the judgment with a Motion to Set Aside Default and Default Judgment. In order to do so, you also have to prove that you have a good defense. For example, if you don't owe the money because it wasn't your account, then you would have a valid defense. Also, sometimes the amount the creditor says you owe is not correct. If you have an actual defense to the case filed against you, you may be better off fighting the judgment.
If you don't have a good defense, you may want to consider either making payment arrangements or bankruptcy. You can file a Petition for Installment Payments with the court to request a specific payment amount based on your income and expenses. Courts often approve these requests. If the court approves your petition, the garnishments will stop as long as you continue the payments.
If you file bankruptcy, the creditor will not be allowed to garnish anything and the debt will go away completely. If you're concerned about buying a home with a bankruptcy on your credit record, you may want to consider buying the home before filing bankruptcy. Sometimes a bankruptcy can help your credit by removing bad debt and judgments.
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