Civil litigation has its own language. There are so many terms the general public doesn’t know. For example, take the ‘abstract of judgment’. Do you know what it is and why it matters? Our role as a judgment collection agency demands that we understand the abstract of judgment. But you would be surprised by how many judgment creditors don’t know what this document is.
This post will explain everything you need to know about the abstract of judgment. As you read, bear in mind that the winning party in a money judgment case is known as the judgment creditor. The losing party is the judgment debtor.
An Official Document
The abstract of judgment is an official document provided by the same court in which the case was heard. It is essentially a summary of the case and its results. An abstract of judgment typically discloses any monetary award issued by the court, along with:
- Any rate of interest imposed by the court.
- Additional costs, including legal fees.
- Any additional orders issued against the debtor.
County clerks can prepare abstracts of judgment. But in many cases, academics or barristers write them. Regardless of author though, an abstract of judgment carries the weight and legal authority of an official court document.
It Might Automatically Trigger Liens
As for why the abstract of judgment matters, there are a couple of reasons. The first is that, at least in some states, an abstract of judgment automatically triggers property liens. Such is the case in Texas.
An abstract automatically creates in places liens a nonexempt real property owned by the debtor. This includes property he owns now and any property he might acquire in the future. The thought of future property being hit with a lien can be a pretty compelling reason to pay a judgment. Liens remain in place until the debt is fully satisfying.
It Creates a Public Record
An abstract of judgment also creates a public record that could prove harmful to a judgment debtor. That could work out well for a creditor, especially because judgments no longer appear on credit reports. Public records are still fair game in judgement collection.
Imagine a lien placed on a debtor’s property. Any title search of that property will turn up the abstract of judgment. The debtor will not be able to transfer or refinance the property without addressing the judgment against him.
An outstanding abstract and judgment could also make it difficult for debtors to refinance a primary residence, buy a new car, or obtain any new forms of credit. Why? Because the abstract demonstrates a very real risk to new creditors. They will think twice before issuing the debtor additional credit.
No Guarantee of Payment
While an abstract of judgment generally works in favor of the creditor, there are downsides. The first is that filing an abstract does not guarantee payment. It simply creates an official recognition of the judgment and recognizes the debtor’s legal obligation to pay said judgment.
The other downside is that liens created by an abstract of judgment cannot be placed on the debtor’s primary residence and certain types of other exempt property. So if a debtor does not own any nonexempt property, an abstract is of little value for purposes of collecting an unpaid money judgment.
An abstract of judgment is an official court document that summarizes the results, awards, and other orders generated by civil lawsuits. If you have won a money judgment, an abstract summarizing it exists. It is probably at the county courthouse where your case was originally decided.