Legal Question in Credit and Debt Law in Pennsylvania

You do not indicate whether the default judgment is for a credit card debt or something else. You also do not indicate why the default occurred or when it was entered. Depending on the answer, it may be possible to have the default judgment opened. I suggest that you see a civil litigation attorney to see whether this is a possibility.

What happens after a default is entered is that the judgment creditor may try and collect. If you have more than $300 in the bank, the creditor can freeze your bank account. If you have real property, the judgment acts as a lien and if you sell it, the judgment creditor will be entitled to receive any equity. You cannot refinance until the judgment is taken care of. I have also seen creditors try to sell a debtor's non-exempt property (his bed, tv and other furniture). Judgments on real property last for 5 years and can be renewed every 5 years. Judgments on personal property (like cars) can last for 20 years. Judgments earn interest at rate of 6% per year so the judgment will only get bigger.

Getting back to your bank account, do NOT commingle funds with another person, especially if you get Social Security or unemployment or something like this. You do not want to be in a position to fight to get money back so either get your name off their account or get your own separate account. Better if you bank online, at a very small community bank more than 25 miles from your home or at an out of state bank (again, at a small bank - nothing in multiple states like Bank of America or Wachovia/Wells Fargo).

If you can afford to pay the judgment, enter into an agreement with the creditor whereby they promise not to seize your property for as long as you make payments until the judgment is paid off. Get the agreement in writing. If you can afford to settle for between 50% and 80% and can pay in a lump sum or over 1-6 months, try for that. Again, get it in writing. If you do not have funds right now, save up until you do. If you have no money and no way to pay ever, then consider bankruptcy and consult a bankruptcy attorney. Many give free consults. Since I do not know what assets you have, your circumstances and if you have other debts, I cannot say whether bankruptcy makes sense in your circumstances or not.

If you need someone to assist you in negotiating your debt, I can do so for a reasonable fee. If you wish to email me further specifics so that I can give better advice, I will give free limited consults via email at [email protected].