What Happens If a Defendant Does Not Pay a Judgment?

Understanding What Happens When a Defendant Does Not Pay a Judgment

When a court enters a judgment against a defendant, it creates a legally enforceable debt. But what actually happens if the defendant does not pay that judgment? The answer depends on several factors: the creditor’s determination to collect, the defendant’s assets and income, and whether the defendant takes proactive steps to protect their property.

Unlike criminal fines or child support orders, you cannot be jailed simply for failing to pay a civil money judgment. However, that doesn’t mean there are no consequences. Creditors have powerful legal tools at their disposal to collect unpaid judgments, and the debt continues growing with interest until it’s satisfied.

Can You Go to Jail If You Don’t Pay a Judgment?

No Debtors’ Prisons in the United States

The United States abolished debtors’ prisons long ago. You cannot be imprisoned simply for owing money on a civil judgment, whether it’s from a breach of contract, personal injury claim, credit card debt, or business dispute. The debt is a civil matter with financial—not criminal—consequences.

Limited Exceptions: Contempt of Court

While you can’t be jailed for the debt itself, you can face jail time for contempt of court if you willfully disobey specific court orders during the collection process. This includes:

• Failing to appear at a mandatory debtor’s examination after being properly served with a court order
• Refusing to provide financial documents when ordered by the court
• Hiding assets or lying under oath about your financial situation
• Violating a court order to turn over specific property

The key distinction is that jail time results from defying the court’s authority, not from the inability to pay. Courts recognize the difference between “can’t pay” and “won’t comply.” If you genuinely cannot pay but cooperate fully with the court’s orders, you won’t face incarceration.

Child Support and Criminal Fines Are Different

Court-ordered child support and criminal restitution operate under different rules. Willful failure to pay these obligations can result in jail time because they involve special legal obligations beyond ordinary civil debts.

What Creditors Can Do When a Defendant Does Not Pay a Judgment

When a defendant refuses or is unable to pay a judgment voluntarily, creditors have multiple enforcement mechanisms available. These post-judgment collection tools can be aggressive and financially devastating.

Wage Garnishment: Taking Money Directly from Paychecks

Wage garnishment is one of the most common enforcement methods. The creditor obtains a writ of garnishment from the court and serves it on the defendant’s employer. The employer is then legally required to withhold a portion of each paycheck and send it directly to the creditor.

Federal law limits wage garnishment to 25% of disposable earnings or the amount by which weekly earnings exceed 30 times the federal minimum wage, whichever is less. Some states provide greater protections. In Florida, for example, heads of household who provide more than half the support for a dependent child have enhanced wage protection.

Wage garnishment continues until the entire judgment, plus interest and collection costs, is satisfied. For defendants living paycheck to paycheck, this can create severe financial hardship.

Bank Account Levy: Freezing and Seizing Your Money

A bank account levy (also called a bank garnishment) allows creditors to freeze your bank accounts and seize the funds to satisfy the judgment. The process typically works like this:

1. The creditor obtains a writ of garnishment
2. The sheriff or process server serves the writ on your bank
3. Your account is immediately frozen
4. After a waiting period (often 10-20 days), the bank turns over the frozen funds

Not all money in bank accounts can be seized. Protected funds include:

• Social Security benefits
• SSI (Supplemental Security Income)
• Veterans benefits
• Federal retirement benefits (when directly deposited)
• Certain child support payments

The problem is that once funds are mixed in your account, banks often freeze everything first and sort out exemptions later. This means even protected money may be temporarily inaccessible, creating immediate financial emergencies.

Judgment Liens: Attaching to Your Property

When a creditor records a judgment lien against your real estate, the lien attaches to your property title. The judgment becomes an encumbrance that must be satisfied before you can sell or refinance the property.

In Florida and many other states, judgment liens attach to:

• Real estate in the county where the lien is recorded
• Personal property in some cases (depending on state law)

Judgment liens can last for many years (up to 20 years in some states) and can be renewed. Even if you plan to wait out the creditor, that lien remains on your property, affecting your credit and limiting your financial options.

The major exception is the Florida homestead exemption, which protects your primary residence from most judgment liens. However, homestead protection doesn’t apply to all properties, and the lien will still attach even if it can’t be foreclosed—creating problems when you eventually try to sell.

Sheriff’s Levy and Sale: Seizing Physical Property

Through a sheriff’s levy, creditors can have law enforcement seize your non-exempt personal property and sell it at auction to satisfy the judgment. This can include:

• Vehicles (except one vehicle up to a certain value in many states)
• Valuable collections (art, jewelry, antiques)
• Business equipment and inventory
• Investment property
• Boats, RVs, and other recreational vehicles

The sheriff’s sale process is time-consuming and often yields less than market value for the seized assets, but it’s an effective tool when defendants have valuable non-exempt property.

Post-Judgment Discovery: Uncovering Your Assets

Before creditors can seize anything, they need to know what you own. Post-judgment discovery gives creditors powerful tools to investigate your finances:

• Debtor’s examination: A court-ordered proceeding where you must appear and answer questions under oath about your income, assets, bank accounts, and property
• Interrogatories: Written questions you must answer about your financial situation
• Requests for production: Court orders requiring you to produce bank statements, tax returns, property records, and other financial documents
• Subpoenas to third parties: Creditors can subpoena your bank, employer, or business partners for financial information

Failure to comply with post-judgment discovery can result in contempt of court sanctions, including fines and, in extreme cases, arrest warrants for failing to appear.

This discovery process is often the first action creditors take when a defendant does not pay a judgment. Once they know where you bank and what you own, they can target those specific assets for collection.

How Much More You’ll Owe: Interest and Collection Costs

An unpaid judgment doesn’t remain static—it grows every day through statutory interest and accumulating collection costs.

Statutory Interest Accumulation

Most states impose statutory interest on unpaid judgments, typically ranging from 4% to 12% annually depending on your state. In Florida, post-judgment interest accrues at the statutory rate set by law (currently tied to the federal discount rate).

Example: A $10,000 judgment with 9% annual interest grows to:

• $10,900 after one year
• $11,881 after two years
• $13,686 after four years
• $18,700 after seven years

Interest compounds the problem, especially for large judgments or defendants who try to “wait out” the creditor.

Collection Costs and Attorney Fees

In addition to interest, the judgment creditor can add their collection costs to the judgment balance, including:

• Attorney fees for enforcement actions
• Court filing fees
• Sheriff’s fees for levies and sales
• Private investigator costs for asset searches
• Fees for debtor’s examinations and depositions

These costs can add thousands of dollars to the original judgment. A $15,000 judgment might balloon to $25,000 or more after several years of aggressive collection efforts.

What Typically Happens First When a Defendant Does Not Pay

Creditors generally follow a predictable collection sequence when a defendant does not pay a judgment:

Step 1: Fact Information Sheet and Asset Discovery

Most courts require defendants to complete a fact information sheet shortly after judgment entry. This document discloses:

• Employment information and income
• Bank account details
• Real estate ownership
• Vehicle information
• Other valuable assets

If the defendant doesn’t voluntarily complete this form, the creditor will schedule a debtor’s examination to obtain the same information under oath.

Step 2: Bank Account Garnishment

Once the creditor knows where the defendant banks, bank account garnishment is usually the first enforcement action. It’s quick, relatively inexpensive, and often successful. A single garnishment can satisfy smaller judgments entirely if the defendant has sufficient funds in their account.

Creditors prefer bank garnishments because:

• They’re fast (often completed within 30 days)
• They require minimal court involvement after the initial writ
• They catch defendants off guard before they can move money
• They’re effective against defendants with steady income who keep cash in accounts

Step 3: Wage Garnishment

If bank garnishment doesn’t satisfy the judgment, creditors move to wage garnishment for defendants with regular employment. While wage garnishment takes longer (continuing over many pay periods), it provides a steady stream of payments until the judgment is satisfied.

Step 4: Property Liens and Seizures

For larger judgments or defendants with significant assets, creditors will:

• Record judgment liens against real estate
• Execute sheriff’s levies on vehicles and other valuable property
• Seek charging orders against business interests
• Pursue foreclosure on non-homestead real property

These actions take longer and cost more but become worthwhile for substantial judgments.

How Long Can Creditors Pursue an Unpaid Judgment?

Judgment Enforcement Period

Judgments remain enforceable for many years—typically 10 to 20 years depending on state law, and they can often be renewed. In Florida, judgments are enforceable for 20 years from the date of entry and can be renewed for another 20 years.

This means a creditor can wait years to pursue collection, then suddenly garnish wages or levy bank accounts long after the defendant thought the matter was behind them.

Judgment Liens on Property

Judgment liens recorded against real estate can remain in effect for:

• 10 years in most states (renewable)
• 20 years in Florida (renewable)
• Until the property is sold or refinanced
• Until the judgment is satisfied or discharged in bankruptcy

Even if a creditor doesn’t actively pursue collection, the lien remains on your property title, affecting your credit score and preventing you from selling or refinancing without paying off the judgment.

Credit Reporting Impact

Judgments can appear on credit reports and severely damage credit scores. While the Fair Credit Reporting Act limits most negative items to 7 years, an unpaid judgment can be re-reported if collection activity continues, keeping it fresh on your credit report.

The credit damage from an unpaid judgment makes it difficult to:

• Obtain credit cards or loans
• Rent apartments or homes
• Get favorable insurance rates
• Qualify for some jobs (especially those requiring financial responsibility)

The Settlement Process: How Most Unpaid Judgments Resolve

Most unpaid judgments eventually settle for less than the full amount. Understanding the settlement process helps both creditors and defendants reach practical resolutions.

Why Creditors Settle

Creditors agree to reduced settlements when:

• The defendant’s exempt assets make full collection unlikely
• Collection costs approach the judgment value
• The defendant offers immediate payment versus uncertain future recovery
• Bankruptcy appears likely if collection continues
• The creditor wants to close the file and move on

A guaranteed $15,000 today beats a hypothetical $30,000 judgment that may never be collected, especially after factoring in attorney fees and years of collection efforts.

Why Defendants Settle

Defendants benefit from settlement by:

• Stopping ongoing garnishments and levies
• Preventing future collection actions
• Removing judgment liens from property
• Clearing their credit record (once satisfied)
• Avoiding bankruptcy’s severe consequences
• Achieving peace of mind and finality

Negotiating Leverage

Defendants with primarily exempt assets have the most negotiating leverage because creditors realize collection will be difficult. Conversely, defendants with significant non-exempt assets face stronger collection threats and may need to settle for higher amounts.

Effective settlement negotiations consider:

• The defendant’s actual ability to pay
• The strength of available exemptions
• The creditor’s collection costs and likelihood of success
• Whether bankruptcy is a realistic alternative
• The value of immediate payment versus prolonged litigation

The Satisfaction of Judgment

Once settlement terms are fulfilled, the creditor files a Satisfaction of Judgment with the court. This document:

• Officially releases the judgment
• Removes judgment liens from property
• Clears the judgment from public records
• Allows the defendant to repair their credit

Always get the satisfaction of judgment in writing and recorded before making final payment. Without it, the judgment remains enforceable even after payment.

Frequently Asked Questions

Can you be jailed for not paying a civil judgment?

No. You cannot be jailed simply for failing to pay a civil money judgment. The United States does not have debtors’ prisons. However, you can be held in contempt of court and potentially jailed if you willfully ignore court orders related to the collection process, such as failing to appear at a debtor’s examination or refusing to produce court-ordered financial documents.

What happens first when a defendant does not pay a judgment?

The first thing creditors typically do is conduct asset discovery by requiring the defendant to complete a fact information sheet or appear at a debtor’s examination. Once the creditor knows where the defendant banks, the most common first enforcement action is a bank account levy or garnishment, which can freeze and seize funds quickly.

Can a creditor take money directly from my bank account?

Yes. Through a bank levy or garnishment, creditors can freeze your bank account and seize the funds to satisfy a judgment. However, certain protected funds are exempt from seizure, including Social Security benefits, SSI, veterans benefits, and certain retirement deposits. The problem is that banks often freeze the entire account first and sort out exemptions later.

How long does a judgment last?

Judgments typically remain enforceable for 10 to 20 years depending on your state’s laws, and in many states they can be renewed for additional periods. In Florida, judgments are enforceable for 20 years and can be renewed for another 20 years. Judgment liens recorded against property can last even longer and survive until the property is sold or the judgment is satisfied.

Does interest accrue on an unpaid judgment?

Yes. Unpaid judgments accrue statutory interest at rates typically ranging from 4% to 12% annually, depending on state law. In Florida, post-judgment interest accrues at the statutory rate. Additionally, the creditor can add collection costs including attorney fees, court costs, and other enforcement expenses to the judgment balance.

Can I protect my assets after a judgment has been entered?

While the best time for asset protection planning is before legal trouble arises, there are still legitimate strategies available even after judgment entry. You can maximize contributions to exempt retirement accounts, properly structure ownership between spouses, convert non-exempt assets to exempt forms (carefully and legally), and claim all available exemptions under state and federal law. However, fraudulent transfers made to avoid creditors can be set aside by courts.

What assets cannot be taken to pay a judgment?

Protected assets typically include your primary residence (homestead), retirement accounts (401k, IRA, pensions), certain wages (especially for heads of household), basic household goods, one vehicle up to a certain value, tools necessary for your trade, life insurance cash value, and property owned by married couples as tenants by the entireties (in states like Florida). The specific exemptions vary by state.

Will an unpaid judgment affect my credit score?

Yes. Judgments can severely damage your credit score and make it difficult to obtain loans, credit cards, rent apartments, or even get certain jobs. While judgments typically remain on credit reports for 7 years, an unpaid judgment may continue affecting your credit if collection activity continues or if the judgment lien remains recorded against your property.

Can I negotiate a settlement for less than the full judgment amount?

Yes. Settlement is very common when defendants don’t pay judgments. Creditors often agree to accept 30-60% of the judgment amount in a lump sum rather than spending years and thousands of dollars on uncertain collection efforts. Defendants with primarily exempt assets have the strongest negotiating position because creditors realize collection will be difficult or impossible.

Does filing for bankruptcy eliminate a judgment?

Yes, in most cases. Chapter 7 bankruptcy can discharge most civil judgments entirely, while Chapter 13 bankruptcy can restructure them. Bankruptcy immediately stops all collection activities through the automatic stay, including wage garnishments and bank levies. However, some judgments cannot be discharged in bankruptcy, including those for fraud, willful injury, certain taxes, and child support.

What happens if I ignore a debtor’s examination?

Ignoring a court order to appear at a debtor’s examination is serious. The court can hold you in contempt, which may result in fines and, in extreme cases, a bench warrant for your arrest. This is not jail time for the debt itself, but for defying the court’s authority. Always appear for scheduled debtor examinations or immediately contact the court to request a continuance if you have a legitimate conflict.

Can creditors garnish Social Security or retirement income?

Federal benefits like Social Security, SSI, and veterans benefits are generally exempt from garnishment by private creditors. Many states also protect retirement account distributions. However, once these protected funds are deposited into a bank account with other money, they can be difficult to separate during a bank levy. Many banks freeze entire accounts first and require you to prove which funds are exempt—which can take weeks while you have no access to your money.