What Is a Civil Judgement?

Civil lawsuits are used in a civil court to resolve a dispute regarding a private matter, typically seeking compensation for damages or a court order to rectify a situation, rather than criminal punishment. A civil judgement (or “judgment” in American courts) is the final decision on the outcome of the lawsuit. Generally speaking, it states who won the case and what the losing party is legally obligated to do. 

Understanding Civil Judgements

Civil judgements are used in civil cases, including contract disputes, property disputes, civil rights lawsuits, and personal injury lawsuits. The judgment may order the defendant to pay money, stop harmful conduct, or pay other costs. The defendant is legally required to comply with a civil judgement. The judgment creditor can garnish the defendant’s wages and bank account file or file a lien on the defendant’s property in order to receive what they are legally owed.  

Can You File Bankruptcy on a Civil Judgement?

Civil judgements can be included when you file for bankruptcy. The specifics of how this works will vary based on if you file for chapter 7 or chapter 13 bankruptcy.  However, judgment liens are very different than the judgment itself.  An experienced bankruptcy attorney can discuss if you need to file a separate motion to avoid a judicial lien on an asset (ex: house, car, bank account).

Civil Judgements in Chapter 7 Bankruptcy

For the most part, chapter 7 bankruptcy will wipe away a civil judgement. However, there are exceptions if the debt is considered non-dischargeable. This includes:

• Fraud
• Malicious injury
• Certain types of government debt

As long as your civil judgement does not involve the above, it will be treated as any other debt would be under chapter 7 bankruptcy. This means your assets will be sold and the proceeds will be used to pay off as much of the debt as possible. After this, the debt is discharged and you no longer have to worry about it.

Civil Judgements in Chapter 13 Bankruptcy

Chapter 13 bankruptcy also allows for the discharge of debt arising from a civil judgement. The same exceptions apply as in chapter 7 bankruptcy. That is, if the civil judgement is for fraud, malicious injury, or certain government debts, it will not be included in bankruptcy. Otherwise, it will be treated the same way as other debts are under chapter 13. This means that a repayment plan will be made, you will make a monthly payment to a trustee, and the trustee will then distribute it to creditors. Once you have completed the payment plan, the debt from your civil judgement will be discharged. 

What Can Be Seized in a Civil Judgement

When a civil judgment is issued, the debt must be paid. If this is not done in a timely manner, assets can be seized in order to pay the debt. This can include:

• Cash in bank accounts
• Wages (through wage garnishment)
• Vehicles
• Valuable personal property such as jewelry or art
• Business equipment
• Real estate

It may seem like anything can be seized for civil judgement, but there are exemptions. These will vary by state. In Pennsylvania, exemptions include:

• Retirement accounts and pensions
• Claims and compensation payments under the Pennsylvania Workmen’s Compensation Law
• Some income from life insurance policies
• Some income from awards from personal injury cases

Having your property seized for a civil judgment can be a disruptive and even traumatic experience. It should be avoided at all costs.

Addressing Judgements Before Filing for Bankruptcy

If possible, it’s generally best to file your bankruptcy petition before a judgment is entered against you. If this is done, it will automatically stop any collection efforts on that debt, potentially allowing you to discharge it completely in bankruptcy. This can prevent you from having assets seized or a lien placed on your property. However, filing for bankruptcy after a lawsuit is also possible.

Do Civil Judgements Show Up on Credit Reports?

Many people become worried that a civil judgement will destroy their credit score. These fears are unfounded. While civil judgements used to be included in credit reports, this is no longer the case. This is because, In 2017, the Consumer Financial Protection Bureau (CFPB) implemented new reporting standards that removed civil judgments from consumer credit reports. 

Can You Appeal a Civil Judgement?

You are able to appeal a civil judgement. Both the winning and losing parties have this ability. Appeals are often made on the grounds of procedural errors, such as improper admission or exclusion of evidence. Appeals are also made due to the finding of new and relevant evidence. In Pennsylvania, you usually have 30 days from the time the judgement is issued to submit an appeal. While you always have the right to appeal, it is important to remember that the outcome of the appeal could be less favorable than the original judgment. For this reason, you should always quickly consult your lawyer after being notified of the judgment against you so you have time to appeal.

What Happens If You Don’t Pay a Civil Judgement?

If you do not pay a civil judgement, you will face severe consequences. These can include:

• The seizure of assets, property, and the freezing of bank account funds
• Wage garnishment (in some cases in PA only)
• Contempt of court charges, possibly resulting in fines or even jail time

Debt from a civil judgement will not disappear because you ignore it.  You should immediately consult with an attorney if you are being sued or have been sued so you know all options.