Having you or your business named in a judgment can have long-term financial ramifications. Fortunately, in some scenarios, you may be able to vacate or set aside the judgment and avoid damage to your business.
A judgment is the official result of a lawsuit. In debt collection lawsuits, the judge may award the creditor or debt collector a judgment against you. A money judgment specifies the parties’ names and addresses and the amount awarded.
How Judgments Can Hurt You and Your Business
A judgment’s entry does not guarantee payment. A judgment can be obtained on the merits of the case, on default (non-appearance by the owing party), by consent or confession, or domesticated from another state or country. A judgment entered in New York is valid for 20 years and can act as a lien on real property. After entry, recording, or domestication of a judgment in New York, a judgment creditor can execute the judgment to “force payment.”
Without court intervention, a judgment creditor can restrain your bank account, brokerage account, your merchant account, divert payments owed to you from third parties, lien your real property, and more.
A judgment against your company goes into the public record and may persuade others not to do business with you. Judgments can also impact your credit and may affect your ability to borrow money and transfer title in property. If you seek a loan any judgments and liens against you must be disclosed to potential lenders.
If a judgment was entered against you and you were never served the legal papers and you have a defense that is of merit, you may be able to vacate the default judgment.
How to Vacate a Judgment
A judgment on default may be vacated by the court if you are able to show you have excusable default and a meritorious defense–a defense that the debt is in whole or part incorrect. Examples of excusable default include the summons being served at an incorrect address or to a person who is not a designated agent of the company.
You can also vacate a judgment if the creditor did not satisfy the requirements in the contract to obtain a judgment. For example, you may be able to vacate the judgment if the contract specified you should have received notice of default in payment and you did not, or if the contract required the parties to first attempt mediation or arbitration and the creditor failed to do so.
It may be that the documents submitted to the court were incorrect and the creditor was not entitled to judgment. For example, the statement of account was not the most recent and failed to include payments made or the party suing did not have the legal right to do so.
Do You Need to Hire a Lawyer to Vacate a Judgment
If you are a corporation you will need to hire a lawyer. Individuals can represent themselves, however, it may be in your best interest to hire an attorney. It’s better to make sure that you have the best chance of success by using a firm devoted exclusively to bad debt.
Why not be smart and choose a firm that is fluent in debt collection litigation to assist you? Frank, Frank, Goldstein and Nager has the experience that pays and is here to assist you.
If you are looking to vacate a judgment, contact us for a free consultation.