Default Judgment Entered? Here's How to Fight Back

You ignored a debt lawsuit. Now there's a judgment against you, and the collection agency is threatening to take money from your paycheck or bank account. That's a default judgment at work. It happens when you don't respond to a lawsuit, and the court rules in favor of the creditor automatically.

Default judgments account for roughly 70% of all debt collection cases, according to research from the Pew Charitable Trusts. Most defendants never show up. Once the judgment is entered, debt collectors gain serious enforcement power: wage garnishment, bank account levies, property liens. But you're not powerless. You can challenge a default judgment if you meet certain criteria, and in some states, you have months—even years,to act.

What a Default Judgment Actually Means

A default judgment is a court order that says you owe the debt without any real trial or evidence review. The collector filed a lawsuit, you didn't file an Answer within the deadline (usually 20 to 30 days), and the court granted judgment by default. It's the legal equivalent of forfeiting a match because you didn't show up.

Once entered, the judgment is a public record. It damages your credit, typically knocking 50 to 100 points off your score. More importantly, it gives the creditor a legal claim to your assets. They can petition the court to garnish up to 25% of your disposable income in most states, freeze your bank account, or place a lien on property you own.

How Collectors Use Default Judgments

The judgment itself doesn't automatically empty your bank account. The creditor must take additional legal steps to enforce it. Common enforcement methods include:

• Wage garnishment: Your employer withholds part of your paycheck and sends it to the creditor.
• Bank levy: The creditor freezes your account and withdraws the judgment amount.
• Property lien: The creditor attaches a claim to your home or car, which must be paid when you sell.

Each method requires a separate court order. The creditor files a motion, the court approves it, and you receive notice,usually after the fact. If your wages are already being garnished, that judgment is likely weeks or months old.

Why Default Judgments Get Entered

You might think courts scrutinize these cases before ruling. They don't. Most debt collection lawsuits involve affidavits from the creditor stating you owe the money. Judges assume the claim is valid unless you challenge it. If you don't file an Answer, there's no reason for the court to dig deeper.

Common reasons people miss the deadline:

• They never received the lawsuit papers (improper service).
• They received it but didn't understand what to do.
• They assumed ignoring it would make it go away.
• They planned to respond but missed the deadline.

Improper service is a legitimate defense. If the process server left papers with the wrong person or lied about delivering them, the court shouldn't have entered judgment. Proving improper service is your strongest path to getting a default judgment overturned.

How to Set Aside a Default Judgment

"Setting aside" means the court cancels the judgment and reopens the case. You get a second chance to defend yourself. Every state allows this, but the rules vary. Some require you to act within 30 days. Others give you a year or more.

Valid Reasons to Set Aside a Judgment

Courts don't set aside judgments just because you ask nicely. You need a recognized legal reason. The most common grounds:

• Improper service: You never received the lawsuit, or it was delivered incorrectly.
• Excusable neglect: You missed the deadline due to a serious emergency (hospitalization, death in the family, deployment).
• Mistaken identity: The debt isn't yours; the creditor sued the wrong person.
• Already paid: You settled the debt before the lawsuit was filed.
• Fraud: The creditor submitted false evidence (rare but possible).

"Excusable neglect" is the hardest to prove. Courts define it narrowly. Being busy at work or forgetting about the lawsuit won't cut it. You need documentation: hospital records, military orders, a death certificate. Even then, judges often deny these motions.

The Process: Filing a Motion to Vacate

Setting aside a judgment requires filing a formal motion with the court that entered it. The motion must explain why the judgment should be vacated and include supporting evidence. You typically file it in the same courthouse where the original case was heard.

Steps:

1. Get a copy of the judgment from the court clerk. You need the case number and judgment date.
2. Research your state's rules. Look up your state's civil procedure code or ask the clerk about deadlines.
3. Draft a motion to vacate. Include your reason (improper service, excusable neglect, etc.) and attach proof.
4. File the motion and pay the fee (usually $50 to $200). Some courts waive fees if you qualify for a fee waiver.
5. Serve a copy on the creditor's attorney. This is required. Use certified mail.
6. Attend the hearing. The judge will ask questions. Bring your evidence and be ready to explain.

If the judge grants your motion, the default judgment is erased. The case goes back to square one. You'll need to file an Answer and defend the lawsuit properly this time. If the judge denies your motion, the judgment stands. You can appeal, but appeals are expensive and rarely succeed.

What If You Can't Get the Judgment Set Aside?

Maybe you missed the deadline to file a motion, or the judge denied it. You still have options. The judgment doesn't disappear, but you can limit the damage.

Negotiate a Settlement

Once a judgment exists, creditors often become more willing to negotiate. They already won; now they want their money. You can offer a lump sum payment for less than the full judgment amount. Many creditors accept 40% to 60% of the balance to close the case quickly.

Call the creditor's attorney (their contact info is on the judgment paperwork). Propose a realistic number based on what you can actually pay. Get any agreement in writing before you send money. The settlement should include language stating the judgment will be "satisfied" once you pay.

Set Up a Payment Plan

If you can't afford a lump sum, ask about a payment plan. Some creditors agree to monthly payments if it means they'll eventually collect. Once you complete the plan, they file a "satisfaction of judgment" with the court, which updates the public record.

Be cautious: a payment plan doesn't stop garnishment. If the creditor already has a garnishment order, they may keep it in place even while you're making voluntary payments. Get confirmation in writing that they'll stop enforcement actions if you stay current on the plan.

File for Bankruptcy

If the judgment is part of a larger debt problem, bankruptcy might be the right move. A Chapter 7 bankruptcy wipes out most unsecured debts, including judgments from credit cards, medical bills, and personal loans. The judgment disappears, and garnishments stop immediately once you file.

Bankruptcy isn't free,filing fees run around $335, plus attorney fees,but it's often cheaper than paying a $10,000 judgment over time. If you're facing multiple lawsuits or already dealing with garnishment, use our bankruptcy screener to see if you qualify.

How to Protect Yourself Before a Default Judgment Happens

The best defense is to never let a default judgment get entered in the first place. If you're served with a debt lawsuit, respond immediately. You have 20 to 30 days in most states. Use them.

File an Answer

An Answer is a formal response to the lawsuit. It tells the court you're contesting the debt. You don't need a lawyer to file one, though it helps. Your Answer should:

• Admit or deny each claim in the Complaint.
• Raise any defenses you have (statute of limitations, lack of proof, identity theft).
• Request that the court dismiss the case or require the creditor to prove their claim.

Filing an Answer forces the creditor to actually prove you owe the debt. Many collection lawsuits involve old debts with incomplete records. Once you challenge them, the creditor may drop the case or offer a settlement rather than go to trial.

Show Up to Court

If the case proceeds to a hearing, go. Judges notice when defendants appear and make an effort. Even if you don't have a strong defense, showing up demonstrates good faith. The judge may give you more time to settle or work out a payment plan.

State-Specific Time Limits

Each state sets its own deadline for filing a motion to vacate. Miss it, and you lose your chance. A few examples:

• California: 6 months from when you learned of the judgment
• New York: 1 year from the judgment date
• Texas: 30 days after the judgment is signed
• Florida: 1 year from the judgment date

Check your state's civil procedure rules or consult a local attorney. Don't assume you have time. The clock starts the day the judgment is entered, not the day you find out about it.

The Bottom Line

A default judgment gives debt collectors serious power, but it's not the end. If you act quickly, you can often get the judgment set aside,especially if you were never properly served. Even if you can't vacate it, you can negotiate a settlement or explore bankruptcy. The worst thing you can do is nothing. Ignoring a judgment won't make it disappear; it just gives the creditor more time to drain your accounts.