What is a Default Judgment?

Have you ever heard of a default judgment? Have you ever had a default judgment entered against you?

The Nebraska Supreme Court rules define default judgments as “cases where the defendant fails to answer, demur, or otherwise plead,” and the plaintiff files a verified petition, affidavits, or sworn testimony on the day after the defendant’s answer was supposed to be filed. Rule 6-1432.

OK, so this is a Netflix envelope. The point is: don't ignore anything you get in the mail. Whether it's your next Netflix dvd or a notice that you're being sued.

OK, so this is a Netflix envelope. The point is: don’t ignore anything you get in the mail. Whether it’s your next Netflix dvd or a notice that you’re being sued.

Cutting through the legalese, here’s what this means:

You get a notice in the mail that you are being sued. Instead of doing something (ANYTHING!), you ignore the notice and hope it goes away. It doesn’t go away. 30 days pass from the day you were served with the lawsuit notice. 

On the 31st day of knowing you are being sued, the plaintiff files all the important paperwork with the court that they think will sufficiently prove their case against you, the defendant. 

There’s a default judgment hearing before the judge. Plaintiff assumes you won’t be there, since you didn’t answer the lawsuit complaint in the first place, and let’s face it, you probably won’t be there. So the judge and the plaintiff’s attorney and maybe even the plaintiff himself is there, at the hearing. You’re not there. No one hears your side of the story because you weren’t there to tell it and you didn’t think it was important to answer the lawsuit complaint in the first place. 

Having heard only one side – the plaintiff’s side of things – the judge will enter a default judgment against you. Not good, not good at all. Now the plaintiff can go about finding ways to get his default judgment paid – by garnishing your wages, garnishing your bank account, searching for pockets of money you might have to pay off the judgment, which is a higher amount than your original debt that went into collections. 

Unfortunately, this is why debt collectors have so much leverage over the average consumer – no one thinks it’s important to respond when they receive notice that they are being sued. Who cares if it’s only for that medical debt that you can’t pay anyway?? I care, because if you allow a default judgment to be entered against you, additional fees, interest, and costs will be tacked onto your original debt. Do you think you should be paying more money on the debt you already can’t pay?

Bottomline: please please please don’t ignore those lawsuit notices. Answer them, show up to your hearing dates, or do whatever you need to do to keep yourself in the game.

 

 

The Worst Thing a Debt Collector can do to You

Picture with me the following scenario:

You receive what looks like formal documents in the mail, or someone shows up at your doorstep to hand them to you, or you get a note in the mail saying you have certified mail to pick up at the post office. No matter how this piece of paper gets to you, it looks official and serious.

After scanning the document to make sure you’re not being arrested, you then realize that you are being sued. By a collection company. For a debt that you may or may not owe to a doctor, hospital, credit card company, or car dealership. Or some other entity that you supposedly owe money to.

What you do next with this document greatly depends on whether you understand what the WORST thing a debt collector can do to you. Here’s option 1 (the not-so-good choice):

  1. You ignore or forget (same thing) the piece of paper. Maybe hope it’s somehow not legitimate, or reason that you just don’t have time to deal with this right now. Or maybe you do owe the debt, so what’s the point of fighting something you already know you owe?

Option 2, below (the better choice):

2. You respond to the document by filing what’s called an “Answer.” Or you hire an attorney to do this for you. You show up in court when you’re supposed to, and you get all the information before settling or going to trial with the collection company.

You may be thinking to yourself: “But why go to all that trouble? That’s just attorney-speak for generating more business for themselves. Or, who has the time to do that? I’m working two jobs and trying to pay child support, there’s no time to deal with something I already know about.”

Don't just sit there! Do something!

Don’t just sit there! Do something!

Here’s where you are wrong. Option #1 allows the debt collector to do the WORST thing that they can do to anyone: ask for a default judgment from the court, and then move forward with enforcing their default judgment.

Default judgments generally provide the maximum amount the collection company is seeking, plus fees, interest, and costs of filing a lawsuit. Allowing a default judgment to happen to you just raises the amount of money you are going to have to pay. A default judgment also allows the collection company to garnish your wages, if you’re employed, or find alternative ways to suck money from you. Third, a default judgment becomes part of your public record, people can see it and draw their own conclusions about it.

Bottom line: the worst thing a debt collector can do to you is get a default judgment against you. Don’t ignore the paperwork they serve you with, and read the paragraph above to understand what makes default judgments the WORST.