4 Ways a North Carolina Judgment Goes Away

A judgment is a decision from a court as to the outcome of a civil lawsuit. When a money judgment is entered, it is a determination by a court that the defendant (judgment debtor) owes that money to the plaintiff. Having a judgment allows the plaintiff to use certain court-sanctioned processes to collect the judgment debt. In North Carolina, this includes execution on personal property and judgment liens on real estate.

When considering what to do about a judgment, it is useful to consider how that judgment might ultimately go way in the long term. I present below four ways that judgments go away in North Carolina.

1. Payment (or Settlement)

Naturally, one could pay off a judgment which would resolved the judgment debt. Perhaps the simplest approach is to tender the full balance due to the clerk of court in satisfaction of the judgment. However, it will frequently make sense to negotiate with the judgment creditor in an attempt to settle it for less than the balance owed. Some creditors will be very willing to settle, others may have very little interest in doing so.

It should be noted that unless there is explicit agreement to vacate the judgment (which is relatively uncommon), paying or settling a judgment results in a satisfied judgment, not a voided judgment. A creditor can't use a satisfied judgment for future collection, but the old judgment still exists as a public record.

2. Expiration of Judgment

In North Carolina, a judgment is enforceable for 10 years from the date it was entered. After that point, it no longer can be enforced and is expired. Prior to the expiration of the judgment, the judgment creditor could seek to have it extended for another 10 years once. The extension is not automatic, and practices vary on whether a creditor will bother with renewal.

3. Voided by Bankruptcy Discharge.

A bankruptcy discharge operates to void a judgment, to the extent the underlying debt would have been dischargeable. Many common judgments would be voided, including credit card judgments. On our other site, I have more extensive information about bankruptcy and judgments, as it applies to North Carolina.

4. Set Aside or Vacate Judgment

The court that entered the original judgment typically has the authority to set aside that same judgment. Getting a court to do so over the objection of a plaintiff/creditor is not an easy task in most situations. Nevertheless, the rules of civil procedure (Rule 60) provide a mechanism to bring the judgment back in front of the court that issued it. Broadly stated, the older the judgment, the fewer options exist for seeking to have it set aside. Certain allegations, including mistake, new evidence, and fraud need to be raised within a year of the judgment being entered. If the judgment is void or otherwise not proper to continue being enforced, there is not an explicit time limit.

Perhaps the most classic case of a void judgment is a judgment entered in a lawsuit where there was never proper service of process. This is rare, but in that case there is a jurisdictional issue that opens the door to setting the judgment aside. Where service of process was not proper, and there was no actual notice of the suit, a defendant must be extremely careful not to waive his or her objection by proceeding in the court without raising it immediately. This would include participating in post-judgment proceedings.

What to Do

When there is an outstanding judgment, there is a temptation to put it out of mind and try to ignore it. Sometimes this works fine, but other times there can be a surprise down the road. It's wise to think about the long-term. If you are judgment-proof (have no assets that can be seized) today, will you remain judgment proof for 10 or 20 years? If you have the mind to pay it before it becomes a problem, are you taking the steps to get things ready to make a serious offer to resolve it? If bankruptcy relief would help, would now or later be more effective in your overall finances? The first step to getting to the end of the road is figuring out the route that you are going to take.

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Knightdale Attorney Erich Fabricius represents clients in bankruptcy, consumer debt litigation, and in small business matters. He is licensed to practice law in North Carolina. His blog posts consider matters related to debt, bankruptcy, litigation, and other legal issues in North Carolina.

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This blog post is made available for educational and informational purposes only and to promote a general understanding of the law, and not to provide specific legal advice. Use of this blog does not create an attorney-client relationship. Reading this post is not a substitute for obtaining legal advice based on the unique facts of your situation from an attorney licensed to practice law in your state. No representation is made regarding the currentness of the information contained in this post. Examples that may be provided in this post are merely for illustrative purposes; the results in your case may be different and no results are guaranteed.