A Default Judgment Was Entered Against Me. Here’s What to Do Right Now.

Written by Steve Rhode, consumer debt expert since 1994 • Last updated July 1, 2026

What Just Happened: How a Default Judgment Works

When a creditor or debt collector sues you, a clock starts ticking. If you don’t file a written answer with the court — usually within 20 to 30 days, depending on your state — the creditor can ask the judge to enter a default judgment. The judge doesn’t look at the evidence. There’s no hearing. The creditor simply wins by forfeit.

A default judgment is not a warning. It’s a final court order saying you owe the money. From that moment, your creditor is a judgment creditor — and they now have legal tools to collect that go far beyond phone calls: they can garnish your wages, freeze your bank account, and place liens on your property. According to Pew Charitable Trusts research, more than 70% of debt collection lawsuits in the jurisdictions they studied were resolved by default judgment — most of those defendants never even knew they were sued.

If you didn’t know you were being sued, that matters — and you may have legal grounds to fight back. But don’t assume you have unlimited time. In January 2026, the U.S. Supreme Court ruled (Coney Island Auto Parts Unlimited, Inc. v. Burton, 607 U.S. ___ (2026)) that even a void federal court judgment must be challenged within a “reasonable time” after you learn of it. That ruling was about federal courts specifically — most consumer debt defaults happen in state court, and many states (California, New York, Florida, Illinois) still have no hard time limit for challenging truly void state-court judgments. But in all cases: courts expect you to act promptly after you find out. Act now.

Your Options Right Now

How to Actually Fight This — Your 4 Paths

• File for bankruptcy (fastest, most powerful). Chapter 7 bankruptcy can discharge most unsecured debt — credit cards, medical bills, old personal loans — in 3 to 4 months for straightforward no-asset cases (complex cases with creditor challenges may take longer). The automatic stay stops all collection the moment you file. Chapter 13 can stop garnishment and let you repay on your terms over 3–5 years. Federal Reserve research shows bankruptcy filers recover their credit scores faster than people who don’t file. Find a bankruptcy attorney at nacba.org.
• File a motion to vacate the judgment (fight it in court). If you were never properly served, had an excusable reason for missing the deadline, or have a legitimate defense to the debt, you may be able to undo the judgment. You’ll need to: (1) file the motion before your state’s deadline, (2) show a valid reason for vacating, and (3) demonstrate a “meritorious defense” — meaning there’s a real argument that you don’t owe the money, or that the amount is wrong. An attorney can assess whether you have grounds. Contact NACA for a consumer attorney referral.
• Negotiate a settlement or payment plan. Even after a judgment, creditors will often settle for less than the full amount — especially if you can offer a lump sum. Get any agreement in writing before you pay a dime. A settlement for less than the full amount may have tax consequences (the forgiven portion can be reported as income on a 1099-C). If you’re negotiating with a debt collector — not the original creditor — confirm the debt is valid first.
• Wait it out if you’re truly judgment-proof. If you have no income above exemption levels, no bank accounts with significant funds, no non-exempt property, and no prospect of that changing, a creditor may not be able to collect even with a judgment. This isn’t “doing nothing” — it’s a deliberate strategy that requires monitoring. Read the full guide on being judgment-proof. And keep in mind that judgment-proof is a status, not a permanent condition — an inheritance can end it, so it is worth understanding how the $124 trillion wealth transfer actually reaches families before any money lands in your account.

What You Need to Know About Your Legal Rights After a Default Judgment

What Coney Island v. Burton Changed — and What It Didn’t: Before January 2026, courts in nearly every federal circuit held that a void judgment — entered without proper legal power, such as after improper service — could be challenged at any time, with no deadline. In Coney Island Auto Parts Unlimited, Inc. v. Burton, 607 U.S. ___ (2026), a 9-0 Supreme Court held that Rule 60(c)(1)‘s “reasonable time” requirement applies to Rule 60(b)(4) motions challenging void judgments — in federal court. Importantly, the Court did not define what “reasonable time” means — federal courts will determine this fact-by-fact. This case arose in a federal bankruptcy court. It is a federal procedural ruling; most consumer debt lawsuits are in state court. State courts operate under their own rules. However, this ruling sends a clear signal: even void judgment challenges require prompt action. Don’t interpret it as “I have forever if I was never served.” You don’t.

California — actually moved in the OPPOSITE direction: In November 2024, the California Supreme Court (California Capital Insurance Co. v. Hoehn, S277510) eliminated the previously applied two-year limitation on motions under CCP § 473(d) for void judgments due to improper service. The court held no judicial time limit can be imposed on a § 473(d) void-judgment challenge. For lack of actual notice, CCP § 473.5 gives you the earlier of 2 years from judgment or 180 days from written notice of entry.

State exemptions can protect more than you think. Many states provide wage and bank account exemptions that go beyond the federal floor. Texas, for example, prohibits wage garnishment for private debts entirely. Florida protects 100% of wages for heads of household. Many states fully exempt Social Security, SSI, and pension income from private-debt garnishment. If you’re in a state with strong exemptions, a judgment creditor may not be able to collect anything even with a judgment. An attorney or free legal aid can assess your state’s specific exemptions.

Important: State court deadlines above are a general overview — your specific situation (debt type, court, whether you were served) can change what applies. Do not rely on this table without confirming your state’s current rules with a licensed attorney. The consequences of missing a vacatur deadline are severe.

If the debt collector violated the law in how they sued you (false or improper service, misrepresenting the debt amount, suing on time-barred debt), file a complaint with the CFPB and your state attorney general. If you need legal help but can’t afford an attorney, find free legal aid through LSC.gov.

Frequently Asked Questions

A default judgment was entered against me — can I still fight it?

Yes, in most cases — but you must act quickly. You can file a motion to vacate the default judgment if you have grounds: you weren’t properly served, you had an excusable reason for not responding, or you have a legitimate defense to the debt. Deadlines range from 30 days to 2 years depending on your state and the specific grounds. The moment you learn of the judgment is when your clock starts. Contact a consumer attorney through NACA immediately.

I was never served — does that mean the judgment is invalid?

Possibly. A judgment entered against someone who was never properly served may be legally void — courts cannot exercise power over a defendant who was never legally notified. In federal court, a January 2026 Supreme Court ruling (Coney Island Auto Parts v. Burton) now requires even void-judgment challenges to be brought within a “reasonable time” after you learn of them. In state court — where most consumer debt cases are filed — many states (California, New York, Florida, Illinois) still allow void judgment challenges without a hard deadline. However, courts everywhere expect prompt action once you know. “I’ll get around to it” is not a strategy. Contact a consumer attorney through NACA as soon as you find out.

I filed bankruptcy — how fast does it stop collection on the judgment?

Immediately. The automatic stay under 11 U.S.C. § 362 takes effect the moment your bankruptcy petition is filed — not after a hearing, not after the creditor is notified. All collection actions, including wage garnishment and bank levies authorized by the judgment, must stop. If a creditor continues collecting after you file, that is a violation of the automatic stay and they can face sanctions.

Can they garnish my wages because of the default judgment?

Yes, once a judgment is entered, the creditor can apply for a wage garnishment order. Federal law under 15 U.S.C. § 1673 caps garnishment at 25% of your disposable weekly earnings, or the amount by which your weekly earnings exceed 30 times the federal minimum wage — whichever is less. But some states have stronger protections: Texas and South Carolina prohibit most wage garnishment entirely. Social Security income is generally protected from garnishment for private debts. See the wage garnishment crisis guide if garnishment has already started.

Can they freeze my bank account?

Yes. Once a judgment is entered, creditors in most states can serve a bank levy — freezing your account and seizing funds up to the judgment amount. They typically do this without advance warning to you. Federal benefits like Social Security, SSI, and VA benefits have automatic protections from garnishment under federal law, but private bank accounts funded by wages are generally vulnerable. If your account is frozen, see the bank account frozen crisis guide right now. A bank levy is not the only tool a judgment unlocks — the same judgment lets a creditor ask the court for a writ of execution and send a sheriff to seize personal property. If that has already happened, read what to do when a sheriff serves you a writ of execution, because the deadline to claim your exemptions is measured in days.

The statute of limitations on the debt had passed — can they still have a valid judgment?

This is a critical distinction: the statute of limitations is a defense that must be raised in court. If you didn’t respond to the lawsuit, you didn’t raise that defense — and the court entered judgment anyway. The judgment itself is now a separate legal obligation, and in most states, judgments have their own extended enforcement period (often 10–20 years). The time-barred nature of the original debt is no longer automatically a defense once judgment is entered. This is one reason why responding to every lawsuit, even on old debt, is so important. Talk to a consumer attorney at NACA.

I can’t afford an attorney. What do I do?

Start with free legal aid: LSC.gov connects you to federally funded legal aid programs that handle consumer debt cases at no cost. Many consumer attorneys also take debt cases on contingency (you pay nothing unless they win) when the collector violated the FDCPA. Bankruptcy attorneys often offer free initial consultations. Find them through NACBA.

How long will this default judgment stay on my credit report?

A civil judgment is no longer directly reported on credit reports — the three major bureaus (Equifax, Experian, TransUnion) stopped including most civil judgments in credit reports in 2017 and 2018. However, the underlying delinquent debt that led to the lawsuit may still appear and stays on your report for 7 years from the date of first delinquency. The judgment itself may appear in public records searches used by landlords and employers. Bankruptcy, by contrast, discharges the debt entirely — Federal Reserve research shows filers recover their credit faster than those who don’t file.

One more thing — everything I share here is based on over 30 years of helping people through exactly this. But my advice is input for your decision, not the decision itself. Only you know your full situation. Talk to an attorney, look at your numbers, and make the choice that serves your future.

If the debt they are chasing is old, read what to do when a collector calls about a debt that’s years old — one wrong move can restart the clock.