A ruling in New York state court could have the potential to upend a decade’s worth of default judgments while also having a “huge” impact on future cases, according to a published report. Earlier this month, the State’s Appellate Division issued a ruling on when a consumer relinquishes the right to attempt to fight a default judgment without taking any action.
The Background: An individual had her wages garnished for three years as a result of a default judgment to recover unpaid student loans. The individual never appeared in the underlying case because she claims never to have been served with a summons. The process server claimed to have served the summons at an address that belonged to the individual’s mother and the person who was served did not match the mother’s description.
- The default judgment was obtained in 2013. The individual learned of it in 2016. The garnishments started in 2017. In 2020, the individual was in housing court because she was no longer able to afford her rent payment, when she learned she could challenge the garnishment.
- A lower court initially rejected the individual’s request, relying on a 2007 ruling that determined an individual waives their right to challenge a judgment after a year’s worth of garnishments occur.
The Appeal: The ruling was appealed and the Appellate Division overturned it, saying that the “mere fact that a defendant, like defendant here, was subject to payments pursuant to a wage garnishment order for more than one year without taking some action is not, without more, a proper basis for finding waiver of the ability to seek relief.”
- The ruling is expected to open the door to more individuals challenging judgments and could have an impact on future collection lawsuits, as well, according to a consumer advocate.
