Texas Post-Judgment Debt Settlement

A judgment changes a debt case, but it doesn't end your options. Texas law limits what a judgment creditor can reach, sets deadlines for challenging a judgment you never had a chance to fight, and allows a judgment to be settled and formally released. Texas Debt Law helps people who already have a debt judgment against them understand where they stand and resolve it on terms they can live with.

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If you only recently learned about the judgment, read the section on undoing a default judgment first. Some of those deadlines are counted in days.

What a judgment lets a creditor do in Texas

A money judgment is a court's finding that you owe a specific amount. It doesn't take anything by itself, but it lets the creditor use the court's enforcement tools against property that isn't exempt:

• Bank garnishment. The creditor can serve a writ of garnishment on your bank, which freezes funds while the court sorts out what is owed and what is protected (Civil Practice and Remedies Code chapter 63).
• Writ of execution. A constable or sheriff can be directed to levy on non-exempt property (Texas Rule of Civil Procedure 621).
• Abstract of judgment. Recording an abstract in a county's property records creates a lien on your non-exempt real estate in that county, including property you acquire later (Texas Property Code § 52.001).
• Turnover orders and receivers. A court can order non-exempt property turned over or appoint a receiver to collect it (Civil Practice and Remedies Code § 31.002).
• Post-judgment discovery. The creditor can send written questions and document requests about your income and assets, and you are required to respond (Rule 621a).

The balance also grows. A judgment on a contract that provides for interest earns post-judgment interest at the contract rate, capped at 18% a year (Texas Finance Code § 304.002). Other judgments earn a rate tied to the prime rate, with a floor of 5% and a ceiling of 15% (§ 304.003).

You cannot be jailed for a debt in Texas. But ignoring a court order, such as an order to answer discovery or appear, can lead to contempt, which is a separate problem.

What a Texas creditor can't take

Texas exemptions are broad, and they still apply after a judgment:

• Wages. Current wages can't be garnished for consumer debt (Texas Constitution article XVI, section 28).
• Your homestead. A home within the homestead limits is protected from forced sale, and a judgment lien doesn't attach to it (Property Code chapter 41 and § 52.001). Section 52.0012 provides a recorded affidavit procedure to clear a judgment lien from the record of a homestead.
• Personal property. Household furnishings, clothing, a vehicle for each licensed driver in the household, tools of a trade and other listed items, up to $50,000 in total for a single adult or $100,000 for a family (Property Code §§ 42.001–.002).
• Retirement accounts. Qualified plans such as 401(k)s and IRAs are generally exempt, separately from that cap (§ 42.0021).
• Federal benefits. When a bank receives a garnishment order, it must protect up to two months of directly deposited Social Security, VA and certain other federal benefits (31 C.F.R. part 212).

Exemptions are not always applied automatically. When a garnishment, turnover order or receivership freezes an individual's property, Rules 679a and 679b require the creditor to serve a Notice of Protected Property Rights and a claim form, and filing that form pauses any sale or payout until a judge decides what is protected (our update explains the process). For a full list, see what property is protected from creditors in Texas.

How long a judgment lasts in Texas

A Texas judgment becomes dormant if no writ of execution is issued within 10 years after it was rendered, or within 10 years after the last writ (Civil Practice and Remedies Code § 34.001). A dormant judgment can be revived only if the creditor acts within two years after it goes dormant (§ 31.006). As long as the creditor keeps issuing writs, a judgment can stay enforceable for much longer than 10 years.

A judgment lien created by an abstract lasts 10 years from the date the abstract is recorded and indexed, unless the judgment becomes dormant first (Property Code § 52.006). Before anyone pays on an old judgment, it is worth confirming whether it is still enforceable at all.

Undoing a default judgment: options and deadlines

Most debt judgments are default judgments, entered because no Answer was filed. Whether one can be set aside depends on the court and on how much time has passed:

• Justice court. A motion to set aside a default judgment or for a new trial must be filed no later than 14 days after the judgment is signed (Rule 505.3). If the judge doesn't rule, the motion is denied automatically on the 21st day. A party can also appeal to county court within 21 days after the judgment is signed or the motion is denied (Rule 506.1), and the case is tried again from the start.
• County and district court. A motion for new trial must be filed within 30 days after the judgment is signed (Rule 329b). Courts generally ask whether the failure to answer was intentional or the result of conscious indifference, whether you have a real defense, and whether a new trial would unfairly harm the plaintiff, under the long-standing Craddock test.
• Restricted appeal. If you didn't take part in the case and didn't file a timely post-judgment motion, a restricted appeal may be filed within six months after the judgment is signed (Texas Rule of Appellate Procedure 26.1(c)). The error must appear on the face of the record.
• Bill of review. After those deadlines, a bill of review is available only in limited situations, most often when the defendant was never properly served.

Service problems are a common ground. The Supreme Court of Texas has vacated a default judgment where substitute service didn't match the court's order (see our summary). Our step-by-step guide on how to reopen a default judgment goes further.

Negotiating a post-judgment settlement

Many judgment creditors will discuss a reduced lump sum or a payment plan, especially when much of what you own is exempt. What a creditor accepts varies from case to case, and no lawyer can promise a particular number. A careful negotiation usually involves:

• Confirming who owns the judgment. Judgments are sometimes assigned to a debt buyer or handed to a different law firm. Payment must go to the party with the right to receive it.
• Calculating the real payoff. Principal, court costs and post-judgment interest at the correct rate, credited for any amounts already collected.
• Reviewing your exemptions. Knowing which of your assets are protected shapes what a realistic offer looks like.
• Putting terms in writing. The amount, the payment dates, what happens if a payment is late, and the creditor's obligation to file a release when you finish.

A forgiven balance of $600 or more may be reported to the IRS on Form 1099-C. Ask a tax professional how that affects you. Our guide on negotiating with debt collectors covers the basics.

Releases of judgment and clearing your record

Paying a judgment does not clear it from public records by itself. A judgment is shown as satisfied in the real property records when a release, receipt or acknowledgment signed by the creditor and acknowledged like a deed is recorded (Property Code § 52.005). The release should be recorded in every county where an abstract was filed, and the court's own file should also show that the judgment has been satisfied.

An unreleased abstract can delay a home sale, a refinance or a title search. We draft the settlement so the release is a condition of the deal and confirm that it is filed.

What to bring for a judgment review

• The judgment, or the court name and cause number if you don't have a copy.
• The original citation and petition, and anything showing when and how you were served.
• Any writ of garnishment, notice of a frozen account, turnover order or receiver papers.
• Letters from the creditor or its lawyers, including any settlement offers.
• A list of your accounts and property, so we can identify what is exempt.

We'll review the judgment for free and tell you whether any deadline to challenge it is still open. Post-judgment work uses the same flat fees as our debt lawsuit defense, based on the amount involved, with payment plans available. A claim against a collector under the FDCPA or Texas Debt Collection Act is a separate legal service, not included in that fee.

Frequently asked questions

Can a creditor take my paycheck after a judgment?

Not for ordinary consumer debt. Current wages are protected. Once wages are deposited, the creditor may try to garnish the bank account, and exempt funds have to be claimed through the court process. See can a creditor garnish my bank account.

I just found out about a judgment from years ago. What now?

Check whether it is dormant and whether a lien was recorded. Even if it's too late to set aside, an old judgment can often still be negotiated and released.

Is settling better than challenging the judgment?

It depends on the deadlines that remain open, how you were served, and your defenses to the original debt. We look at both before recommending either.

Will a judgment show up on a title search?

A recorded abstract of judgment appears in county property records until it expires or a release is recorded. See what a release of judgment is.

What if I was never served?

Defective service can be grounds to set a default judgment aside, even after the usual deadlines. Bring whatever you have and call us promptly.

If you haven't been through a lawsuit yet and were just served, see our Texas debt lawsuit defense page and the answer deadline calculator. If a collector broke the law while collecting, our FDCPA attorneys can review it. More answers are in our debt lawsuit Q&A.

Get a free review of your judgment

Call or text (214) 945-0000, or start your case evaluation online. Have the cause number ready, and tell us when you first learned about the judgment.

Sources

• Texas Civil Practice and Remedies Code § 34.001 (dormant judgments) and ch. 31, §§ 31.002 and 31.006 (turnover and revival)
• Texas Finance Code §§ 304.002–.003 (post-judgment interest)
• Texas Property Code ch. 52 (judgment liens and releases)
• Texas Property Code ch. 42 (personal property exemptions)
• 31 C.F.R. part 212 (federal benefits in bank accounts)
• Texas Rules of Civil Procedure and Rules of Appellate Procedure (Texas Judicial Branch), including Rules 329b, 505.3, 506.1, 621, 621a, 679a and 679b, and TRAP 26.1

General information, not legal advice for your case.