If you've been ordered by a court to pay a civil lawsuit judgment yet don't have the financial means to do so, you may want to consider filing for bankruptcy. The ramifications of not paying a civil lawsuit judgment can cause your financial situation to be far worse than it is right now. Here's what could happen and how filing a bankruptcy can help.
Two Things that May Happen if You Don't Pay the Judgment
Failure to pay a judgment from a civil lawsuit can cause two specific things to happen that could heavily impact your wallet.
1. The loss of your driving privileges. The person or company who was awarded the judgment can file paperwork with the court system to have your driver's license suspended. This suspension could last 10 years or longer, depending on the laws of your state. To reinstate your driving privileges, you must either enter a payment plan or pay the judgment in full, as well as obtain a Certificate of Insurance, which may be rather costly as well.
2. The garnishment of your wages. They may also garnish your wages directly from your bank account if you fail to pay the judgment. Fortunately, federal law states that there are limits to how much can be garnished (25% of disposable income or your income over 30 times the minimum wage, whichever is less).
The judgment of a civil lawsuit made the opposing party in your civil lawsuit case become your creditor, which gives them the right to take these types of measures.
Filing a Bankruptcy Can Help You
Take a close look at your financial situation and determine how your life and your earning capacity will be affected if your driver's license is suspended and you lose a portion of your disposable income. It may be beneficial to you to go ahead and file for bankruptcy now before either or both of those two measures are taken by your creditor.
If, however, you decide to take a "wait and see" approach and are later hit with a driver's license suspension and/or wage garnishment, filing for bankruptcy can help you get your license reinstated and stop the garnishments. However, whichever plan of action you take, you must include this creditor in your bankruptcy filing's list of creditors for them to get paid and for the courts to reinstate your driver's license and stop the wage garnishments. Speak with a bankruptcy attorney in your area for more state-specific information that could impact your situation.