What Can I Do If a Default Judgment Has Been Entered Against Me in New York
Many people don’t learn that a judgment has been entered against them until a bank account gets frozen or their wages get garnished. This is typically because they ignored legal papers they received (such as a summons and complaint), or they were never actually served.
If a debtor owes money for a consumer debt (i.e., debt for personal, family or household purposes) he or she is supposed to be sued in the county where the contract was signed, or in the county where he or she lives. In
New York City, if a claim is under $25,000 it is brought in the Civil Court. Consumer claims, such as for credit card debts, are typically brought in the Civil Court. Upon learning about a judgment the debtor needs to get a copy of the case file from the Clerk’s Office at the relevant Civil Court (i.e., Bronx Civil Court, Queens Civil Court, Kings County Civil Court, New York Civil Court, or Richmond Civil Court). The debtor needs to look at the “affidavit of service” to see how and where the legal papers were served. New York law permits substitute service, such as so called “nail and mail” service (where one copy is posted to the front door of the debtor’s resident and a duplicate set is mailed to him or her), among others.
1. Order to Show Cause to Vacate Default.
The debtor/defendant can bring an order to show cause in the Civil Court seeking to vacate the judgment and dissolve any restraint on his or her bank account.
New York law permits setting aside default judgments in certain circumstances, including, among other things, lack of personal service upon the defendant of the summons initiating the action. A defendant seeking to set aside a default judgment generally must do so within one year of obtaining knowledge of entry of the judgment and have a meritorious defense (i.e., defendant must have a valid basis to defend the claims raised against him/her in the complaint). Whether or not a judgment against a debtor can be set aside depends upon the underlying facts of the situation. New York City Civil Courts are fairly liberal in granting orders to show cause to vacate judgments.
If the Court grants an order to show cause to vacate judgment, the judgment will be set aside and the debtor/defendant will be permitted to file an answer and defend the lawsuit. My law firm, Starr & Starr, PLLC, represents people in setting aside default judgments in Civil Court. However, it usually doesn’t make economic sense to hire us unless the judgment is fairly large (such as $10,000 or more).
2. Personal Bankruptcy.
Another way to get rid of personal liability on a judgment is to file a personal bankruptcy. A number of prior blog posts and the Frequently Asked Questions on our website (at www.starrandstarr.com) provide an overview of the different types of personal bankruptcy. An order of discharge in a personal bankruptcy case wipes out the debtor’s personal liability on a judgment. However, if the debtor owns real estate on which the judgment has becomes a lien, the lien does not automatically get wiped out in bankruptcy. A judgment of the New York Supreme Court automatically becomes a lien on any real estate of the debtor in the county when it is filed with the County Clerk. A judgment of a lower court, such as Civil Court, becomes a lien when a transcript of judgment is filed with the County Clerk. But, in bankruptcy, a debtor can seek to avoid a lien that impairs his or her homestead exemption.