Consumer Credit

So there has been a Default Judgment entered against you, now what?

By April 1, 2016 No Comments

First off, you are not alone. In New York City alone there are hundreds of default judgments entered every month. When dealing with a default judgment time is of the essence so you should act fast in order to avoid potential executions; which include wage garnishments, bank levies, placing liens on real estate and vehicles.

The Law: CPLR §3215

In New York, CPLR §3215 is the law that governs default judgments. CPLR §3215(a) states:

When a defendant has failed to appear, plead or proceed to trial of an action reached and called for trial, or when the court orders a dismissal for any other neglect to proceed, the plaintiff may seek a default judgment against him.

CPLR §3215 is much longer and more complex than what is included above, but for our purposes the above section will work.

How Did This Happen To You?

In order for a default judgment to be entered against you in New York, you must have had a lawsuit filed against you. Once a lawsuit is filed, New York State Law requires that the Plaintiff, the party suing you, serve you with notice of the law suit; either a Summons with Notice or a Summons and Complaint. Once served, New York Law only gives the defendant a limited amount of time to responded, a/k/a appear or answer, the lawsuit. The manner in which you are served will determine how much time you have to respond to the lawsuit. If you are served personally, you have 20 days to respond, but if you are served though substituted service, which is more common, you have 30 days to respond.

Don’t Think That You Were Ever Served With Notice Of The Lawsuit?

It is more common than you would think and we hear this very often when potential clients contact our office. How is this possible? For more information on this topic check out our firm’s blog post: I Was Never Handed the Summons, So How Was I Served?

What Can You Do Now That There Is a Default Judgment Entered Against You?

As mentioned above, time is of the essence because the longer that the default judgment has been entered the more difficult it can be to challenge the default. According to CPLR §317:

…..[A Defendant] may be allowed to defend the action within one year after he obtains knowledge of entry of the judgment, but in no event more than five years after such entry, upon a finding of the court that he did not personally receive notice of the summons in time to defend and has a meritorious defense………………………………………………………………………………

As you can see above if the default judgment in 5 or more years old it will be extremely difficult, if not impossible, to vacate or remove.

Motion to Vacate a Default Judgment:

Filing a Motion to Vacate a Default Judgment is one way to remove the default. If the Motion is granted the case will be returned to the Court’s calendar; granting you the ability to raise defenses and defend yourself against the Plaintiff. Filing a Motion to Vacate a Default Judgment is complicated and it is in your best interest to contact an attorney to do so.

CPLR § 5015(b)

Under CPLR § 5015(b), parties can stipulate, aka agree, to vacate a default judgment upon consent of each party to the suit. This sounds like a great option, and it some cases, it can be! Although, in our experience, a lot of Plaintiff’s Attorneys will not agree to do so under normal circumstances, but an experienced attorney might be able to negotiate this on your behalf!

Settle the Case

Often times if the lawsuit is a consumer credit case, i.e. the Plaintiff is alleging that you owe money for a credit card, rent, store card, etc. they might be willing to withhold executing on the default judgment if there is a settlement in place. In most cases the settlement would consist of the defendant paying the plaintiff in a lump sum or on a monthly basis. Then, once the settlement terms are satisfied, the plaintiff will inform the court. Negotiating a settlement when a default judgment has been entered can be difficult because the Plaintiff usually believes that they have the upper hand.

Conclusion

Just because you have a default judgment entered against you doesn’t mean that you are out of options, but your time is limited. If you find out that there has been a default judgment entered against you should take action immediately to, hopefully, avoid executions against your assets. An experienced attorney can let you know all your options and help you decide what option is best for your situation.