In order to vacate, set aside, or remove a default judgment in New York, you must make a motion to the court in which the judgment was entered. The motion will contain a specific request for the court to vacate the judgment and return monies taken to satisfy the judgment.
There are two ways to file a motion with the Court. Both include notice to the judgment creditor or the entity or person the judgment was assigned to. The method chosen will be pre-determined by what, if anything, the judgment creditor did to enforce the judgment or, if you need to rush to vacate the judgment because of other circumstances in your business or life.
Two Methods for Vacating a Default Judgment
The first method, referred to as a special application, involves requesting a temporary restraining order (TRO) asking the judgment creditor to stay or cease (at least temporarily) any efforts to enforce the judgment. There is almost immediate relief from continued judgment enforcement by the creditor while the TRO is in place until an almost immediate hearing can be had by a judge on your application to vacate or remove the judgment.
The second method is a notice of motion. The party, assuming they never appeared in the case, files a notice of appearance and serves a notice of motion to vacate the judgment. There would be no stay of execution or anything to prevent the creditor from executing on the judgment but, if you are successful and the judgment is vacated, the judgment creditor will be required to return monies collected to satisfy the judgment.
Moving by order to show cause is an expedited application to vacate or set aside the judgment. The Court may require you to post a bond as security for the stay.
Notice or Not? How to Choose.
If you are in a rush to remove a default judgment or want to stop the creditor’s execution efforts, you will move by special application. Here are some reasons why you may be in a rush and need to move to vacate the judgment by special application:
- You never received notice of the underlying lawsuit
- Your bank account(s) were restrained and you need access to the account(s)
- You need access to other assets frozen or restrained
- You are seeking financing and uncovered teh judgment
- Almost a year has passed since the judgment was entered
- Time is of the essence to get this done
There are benefits to making a special application, as opposed to a motion to vacate the judgment. The party seeking to enforce the judgment is usually stopped or stayed from doing so until your motion is decided, pausing any enforcement. If the judgment creditor wishes to have their judgment stand, they need to oppose your application to vacate the judgment and “show cause” why you should not be granted the relief you are seeking. The party seeking to vacate the judgment, the judgment debtor, if they wish, may have an opportunity to settle for less than the judgment amount.
A special application to vacate the judgment will be decided very quickly. It can take anywhere from three to nine months for a judge to decide the motion and issue an order when it comes to regular motions. If you are not in a rush for an order to vacate the judgment, you will most likely move by regular motion.
The Difference in Cost Between a Special Application and a Regular Motion to Vacate a Judgment
A special proceeding, an order to show cause, is more work. The motion papers are prepared in a special format, filed with and approved by the court. Sometimes preliminary notice is given to the other side, which necessitates a quick hearing for that side to informally oppose the application. If successful, the judgment creditor will be able to submit the order to show cause with a request for a TRO to the judge who signs it. The judge orders a date for the hearing and that the papers submitted in support of the application and the judge’s order be served in a specific manner on the judgment creditor, their attorney, the marshal or sheriff or anyone else that is involved in the execution and restraint of the assets belonging to the judgment debtor. A hearing follows on the predetermined date, which would include any opposition by the judgment creditor and/or its agents.
Because of the additional time and effort to bring this type of application, lawyers typically charge a higher fee. If the judgment was entered against a corporation, the corporation must be represented by an attorney. If it’s against a natural person, representation by an attorney is not required.
If you have questions about vacating or removing a judgment or if you are a judgment creditor looking to stop a judgment from being vacated, please contact us for a free consultation.