Harvey L. Cox answers:

If by ”registered with the county clerk” you mean that the company recorded an abstract of judgment, then yes the abstract does create a judgment lien in Texas against your non-exempt real estate in the county where it is recorded.  But, the important distinction here is that a judgment lien in Texas only attaches to non-exempt real property.  your homestead is exempt from such a lien.

What happens is that the abstracting of the judgment against you does create a judgment lien on all of your real property in the county where the abstract is recorded.  Technically, then, the abstract does create a lien on your homestead property.  But, that lien must be released as to your homestead if you request the judgment creditor to provide a release.  The judgment lien will still attach to your other non-exempt real estate.  But, as to the homestead, it will be released.

If you request that the company release a judgment lien in Texas and they fail or refuse to do so, you can sue them for creating a cloud on the title to your homestead property. Of course, you really don’t want to get yourself involved in the expense of such a lawsuit in my opinion.  So, you really want to go after the release. But, if they just refuse to do it, there is an affidavit you can file to release it yourself.  For details on that process, check out What You Absolutely Must Know If You Owe a Judgment in Texas.

Harvey L. Cox answers:

Retirement Funds Are Exempt Property in Texas

The short answer is no.  Your retirement funds are generally protected from garnishment to collect a judgment in Texas.  They are considered exempt property in Texas.  Now, having said that, the devil is, as they say in the details.  If you have a general savings account, brokerage account or any other type of ”demand” account with funds in it and you are simply claiming that as your retirement funds, you will likely have trouble protecting it from a garnishment to collect your judgment.

Retirement Funds Must Held Correctly to be Exempt Property in Texas

To qualify as exempt property in Texas your retirement account will need to meet certain requirements.  For instance, pensions, annuities and retirement benefits of government employees are usually exempt property.  See Texas Government Code § 811.005.  This would, as I understand it, include payments by the Teacher Retirement System.  See Texas Government Code § 821.005.  Additionally, pensions, profit-sharing, retirement and other such plans with your employer are also exempt in Texas.  See Texas Property Code § 42.0021.  As exempt property, these funds would be exempt from attachment, execution, and seizure for satisfaction of debts.

The key to answering your question, therefore, lies in the nature of your retirement funds.  If they are simply cash or ”on demand” accounts you have at a bank, savings & loan or brokerage house, the funds in those accounts can be garnished by a judgment creditor because they are not exempt property.  To meet the requirements of exempt property in Texas those funds will need to be retirement funds due to you through your employment and will need to be held in proper retirement accounts.

I did recently get sued but I didn’t bother going to court because I couldn’t afford a lawyer.  Besides, I did owe the debt I just didn’t pay it.  Now I get a notice saying that an abstract  has been issued.  What does that mean and should I be concerned?

Harvey L. Cox answers:

In a nutshell it means that the court granting a judgment against you has issued an abstract of that judgment.  An abstract of judgment is simply a written summary of the judgment.  It states how much money the losing party of a lawsuit owes to the winning party in the lawsuit, the rate of  interest to be paid on the judgment, court costs and attorneys fees, if any.

Reason for An Abstract of Judgment

The reason an abstract is issued is so that a record of the judgment can be filed in real property records.  The abstract is usually filed in the real property records of the county where the judgment was entered.  But, an abstract of judgment can be filed in any county where the judgment debtor (lawsuit loser) lives or owns real estate.  The filing of the abstract creates a lien on the judgment debtor’s property and gives public notice that a lien is claimed on the property.

You Should Be Concerned About an Abstract of Judgment

If you have a judgment entered against you (which you are apparently in that situation) and you don’t pay the judgment, the abstract  that has been issued will create a lien on any real estate you own in the counties where it is filed.  If you own real estate that is not exempt from a judgment lien, the lien created by the abstract of judgment can be foreclosed on by the judgment creditor.

If your judgment creditor forecloses on the lien created by the abstract, your non-exempt real estate will be taken and sold with the proceeds being used to pay the judgment.  The foreclosure, however, can only happen against non-exempt real property in Texas.  If the only real estate you own is your homestead, the judgment lien cannot be used to foreclose on that homestead.  In other words, the homestead is not subject to such a forced sale for a civil judgment in Texas.

But, there is reason to be concerned when you have a judgment against you and an abstract of judgment is filed.  Given the fact that a judgment in Texas has a life span of 10 years and can be renewed for an additional 10 years, you face the prospect of having any non-exempt real estate you acquire in the future become subject to the lien created by the abstract of judgment recorded against you.

Harvey L. Cox answers:

What Does It Mean to be Judgment Proof?

Let’s first clear up what you mean by judgment proof.  From the nature of your question if appears that you are defining being judgment proof as being in a situation where you currently don’t have enough assets from which to pay the judgment.  Assuming that you are judgment proof by that definition, you still have to answer the interrogatories your judgment creditor sends you.

Under Texas law your judgment creditor has the right to request your employment and financial information on a regular basis.  You actually also have a duty to update your answers to those questions if anything about your finances changes from the previous answers.  So even if they weren’t sending you the interrogatories on a regular basis you have an obligation under Texas law to update your answers as you encounter changes, good or bad, in your financial situation.  But, since most judgment debtors don’t provide the updates judgment creditor attorneys usually send out interrogatories every 6-9 months.

If you refuse to answer the questions on the basis that you believe you are judgment proof the judgment creditor’s attorney can file a motion to compel you to answer.  What that means is the judge will, after a hearing, sign an order requiring you to answer the questions.  If you continue to refuse to answer, you may be found in contempt for violating the court order.  The contempt charge could land you in jail for up to 6 months if this is a district court case or until you decide to cooperate and answer the questions.

I suggest you answer the questions as often as they send them.

Harvey L. Cox answers:

From the facts you’ve given it sounds like the loan is totally unrelated to your homestead.  In other words, I understand that the loan was NOT used to buy the homestead.  It could have have been used to do improvements on the homestead but you don’t make that clear in the question.  I’ll answer in such a way that it’s clear in either case.

Texas homestead law absolutely protects your homestead from seizure and sale to pay a general civil money judgment.  So, if the creditor you reference does sue you and does get a judgment against you that creditor can’t take your homestead from you to pay the judgment.  The only exception to that rule is when the creditor either loaned you the money to purchase the homestead or loaned you the money to do improvements on the homestead. If the creditor loaned you the money to purchase the homestead and you are in default of that purchase loan, homestead law would allow that creditor to take your homestead in Texas.  Likewise, if the creditor on whom you’re defaulting loaned you money to do improvements on your homestead and you are defaulting on that home improvement loan the creditor could force a sale of your homestead to pay the defaulted loan.

But, from my understanding of your question the creditor in question loaned you money that has nothing whatsoever to do with your homestead.  In that situation, Texas homestead law absolutely protects your homestead from the creditor’s judgment.

Harvey L. Cox answers:

Wage Garnishment in Texas is Limited

To start with, you can’t go to prison for a civil money judgment.  Debtor’s prisons went out a long time ago.  Next, wage garnishment in Texas isn’t permitted for a general civil money judgment other than child support.  Your judgment credit can garnish your bank accounts but you’d need to have sufficient funds there to make it worthwhile to do so. In the scenario you gave in your question, the $1,500 in your bank account would be worth garnishing and your judgment creditor certainly has the right to do that in Texas.

Your pension plan is also protected in Texas.  Included in that are employee contributions to ERISA qualified retirement plans, deferred compensation plans, tax-deferred compensation plans, tax-deferred annuities and health insurance plans.

You should, however, be aware that a judgment in Texas is good for 10 years and it can be renewed for another 10 years.  So, while you may be judgment proof now you certainly wouldn’t want to be so for then next 20 years.  Since a judgment against you will likely accrue interest it would be in your best interest to work out some sort of a payment plan with your judgment creditor.

But, wage garnishment in Texas for a judgment like you describe is not something you should be overly concerned about.

Harvey L. Cox answers:

Garnishments in Texas Require an Application

In Texas, you can’t put a lien on a bank account with your money judgment.  You can seize a judgment debtor’s bank account but you don’t do that by putting a lien on it.  The process of seizing a bank account to pay a judgment in Texas is known as a bank garnishment.  To complete garnishments in Texas you must file an application for writ of garnishment with a court of competent jurisdiction in Texas.  Typically, it is best to file applications for garnishments in Texas with the court that granted the judgment.

Garnishments in Texas Freeze Bank Accounts

After filing the application for writ of garnishment the court will issue the writ which the sheriff serves on the bank.  At that point, the bank will ”freeze” the accounts of your judgment debtor.  The bank’s attorney will then file an answer to your application for writ of garnish telling the court whether the bank holds funds belonging to your judgment debtor and, if so, how much.  If the bank does have an account for your judgment debtor the court will typically enter an order requiring the bank to turn the funds over to you as the judgment creditor.

The whole process is fairly simple and straightforward.  You can either hire an attorney to do garnishments in Texas for you or attempt to do it yourself.  If you want to do it yourself, you can get a copy of my book, How to Collect Your Own Judgment in Texas, for complete instructions and forms you need to do it.