What Are Default Judgments?
A default judgment is the court deciding a case against a party who did not show up to court to answer a summons or complaint or who did not pay a fine on time if a plea has been agreed to. If a defendant is an individual (a person) and does not appear on the date of summons In New York City Criminal Court, then a warrant will be issued to bring the individual to appear before the court.
If the defendant is a business and the business fails to appear on the summons date, the court will enter a default judgment saying the business must pay a specified fine. Since a business cannot be arrested, the courts use default judgments to compel businesses to appear.
Can Default Judgments be Removed?
In most instances default judgments entered against a business by a court can be set aside. A business must be represented by an attorney in Criminal Court at the business’s expense.
The business’s attorney will appear and have the judgments vacated and then either enter a plea agreement or set a date for trial. The fines associated with default judgments can be as much as 5 to 10 times the amount of a well negotiated plea, so the initial out of pocket expense of hiring a qualified attorney will often pay for itself.
Additionally, fees paid to an attorney to defend a business are often tax deductible, while the default judgment fines and fees are not.
Ignoring Default Judgments…Bad Idea
A judgment against your business will not simply disappear if ignored. Even if a default judgment is entered and the fines are set, if not timely paid, additional fees may double the amount of the default judgment.
Failure to pay the fine imposed will trigger the City to place liens against your business and send your judgments to collections, which are handled by the Sheriff. The Sheriff and City Counsel will add on poundage fees, interest and Sheriff’s fees.
If the judgments and associated interest and fees are not satisfied, the Sheriff will begin taking an inventory of the business’s assets to be sold.
Aside from the financial impact of default judgments, a business may also experience difficulty getting or renewing licenses or permits, applying for loans, or obtaining insurance. In such cases, a business may have to cease operating.
What to do
First, if you own a business with default judgments, speak to an attorney. The business must be represented by an attorney, there is simply no way around this.
Second, speak to attorney, sooner rather than later. As time goes on the ability to lower the fines imposed becomes more difficult and costly. If the default judgment is not passed due then it can usually be vacated and negotiated in a single appearance. If the default judgment is passed due and liens have been placed on the business, then your case involves more work and appearances for your attorney, thus costing more time and money.
Again, since your business must be represented by an attorney, it is financially best to hire an attorney as soon as possible.
How We Help
Our attorneys represent businesses weekly in New York City Criminal Court. Even though each case is different, we have a good idea of what the outcome will be. In the legal profession, as with most business, consistency is key. It’s not just knowing the law, the court and the people, it’s knowing the likely outcome. Call us so we can help clear up any legal issues you or your business may have. We are more than willing to discuss your case with you.