Published on:

Can A Judgment Creditor Really Take My House to Pay the Judgment?

As the nation enters Phase 2 of the Coronavirus Lockdown, millions of Americans are still behind on their monthly bills. Many lenders have implemented programs to help people manage debt payments during this economic uncertainty.  However, while people with student loans, mortgages and automobile loans were offered helpful alternatives to survive the Corona-induced downturn, people with credit card debts often were not. Debtors with medical debt have not fared well either.

A recent article in the California Law Review Online declared that, “The coronavirus pandemic is set to metastasize into a debt collection pandemic. This is because while evictions, foreclosures and student loan payments have been stayed by various government  orders and federal regulations, there is no blanket moratorium or order stopping debt collection lawsuits. Many debt collection law firms have ramped up credit card collections lawsuits since they have not been able to bring or finish foreclosure lawsuits. Many credit card collection lawsuits end up with the consumer getting a default judgment entered against them, since they believe there is nothing that they can do to stop these lawsuits. Debt collection law firms nationwide kept filing new cases during the shutdown, consumers be damned. For example, in Maryland, two major debt collectors alone filed over 2,000 suits in April.  These law firms must keep their gravy train rolling, even if many Americans have lost their jobs or part of their income, through no fault of their own.

After a homeowner gets a judgment against him or her, the law firm will usually attempt to get paid–voluntarily at first, and then by using court process to take the homeowner’s income and assets. There are several ways in Florida that a judgment creditor can collect on a judgment.

The  one way that a judgment creditor may not collect on a judgment is by  forcing the sale of  a debtor’s homestead.  There is often confusion on this issue since many collection lawyers tell debtors that they will “file a lien on all real and personal property that they have in the county in which they reside.” This lien, however, cannot attach to a debtor’s homestead.

I recently represented an 82-year old Cuban immigrant who was an Army veteran. He was the victim of identity theft. When a South Florida law firm sued him, he told the lawyer and judge that it was not his signature on the promissory note. He could not afford to hire an expert witness to offer an opinion as to whether it was his signature on the note. The court entered a $40,000 judgment against him about 10 years ago. The law firm harassed him on the phone and told him that they were going to foreclose on his home in order to make sure that they and their client got paid.

He called our office to see what could be done. I first assured him that the  law firm was wrong in telling him that they could put a lien on his home and sell it to satisfy the judgment. I reviewed his options with him. He did not want to file bankruptcy, which would have discharged the debt. He asked what else could be done to protect his home. We filed a Notice of Homestead in the Circuit Court for him. This is not the same Homestead declaration that one files to get a break on property taxes. This Notice puts into effect Article X, Section 4(a) of the Florida Constitution, which declares, “There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien” on one’s homestead for this type of debt. There are some debts, however,  which can give rise to a lien on one’s homestead: mortgage notes, tax debts and debts owed to contractors who repair your home. (Judgments from credit cards and other consumer debts are not on the list of obligations which can lead to a lien being placed on your homestead.)

A Notice of Homestead gives the world notice that your homestead is exempt from judgment creditors (judgment lien holders have 45 days to contest the notice; grounds to contest the Notice include: this isn’t really the debtor’s homestead).  Nevertheless, the judgment is still valid and can stick around for at least 20 years from the date the judgment was entered.  But now the client can sell the home or get a reverse mortgage without having to deal with a judgment creditor slowing down the process at closing, claiming to have a lien that really never existed. This document can also be used when you are selling  your home or trying to get the loan on it refinanced or modified. Too often, title companies or underwriters at banks insist  that you must pay off a judgment in order get a  clear title. This is not true. This Notice solves the issue and allows the homeowner to sell or refinance the home without having to pay off any judgment creditors who claim to have a lien.

If you have lawsuits pending or judgments against you, and need advice on how to protect your assets, contact the Law Office of David M. Goldman, PLLC today for a free initial bankruptcy consultation. Our office has a bankruptcy lawyer who has been helping debtors discharge their debts and protect their assets from creditors for nearly 28 years.  A Jacksonville Bankruptcy Lawyer can help you decide if filing bankruptcy is best for your future.















Contact Information