In its most basic form, a Default Judgment occurs when one party sues another and the party being sued (the Defendant) does not file an Answer with the court within the time period set by the court rules. For example, if a person is served with a Complaint in New Jersey, they have 35 days to file an Answer (or another responsive documents like a Motion to Dismiss.) If the person doesn't file the per suing (the Plaintiff) can file a motion with the court for a default judgment. Getting a default judgment is the equivalent of being awarded a judgment at trial. So, if someone is being sued for $35,000 and the plaintiff obtains a default judgment, he can then attempt to seize assets or garnish wages in order to satisfy the judgment. Bottom line here is that a default judgment is a bad thing.
What Should You Do?
The answer is simple, but not always possible. You should avoid a default judgment by making sure that you file an Answer or other responsive document before the deadline. The seems simple, right? There are a number of other reasons whey people don't file their Answer in a timely manner. For example, sometimes a defendant doesn't get served with a copy of the complaint or perhaps they are in the hospital and can't deal with the complaint when it arrives. Fear not! All is not lost. Under certain circumstances you can file a motion to vacate the default judgment and get another chance to file an Answer and defend the lawsuit.
Vacating a Default Judgment
While every state has difference court rules and procedures, just about every court will grant a motion to vacate a default judgment is the defendant can show two things. Those things are Excusable Neglect and a Meritorious Defense. Let's explore what this means.
Excusable Neglect
In a nutshell, Excusable Neglect means that there is some reasonable basis for your failure to file the answer in a timely manner. People often ask, what constitutes Excusable Neglect? Well, there is no one answer. Courts look at Excusable Neglect on a case-by-case basis. The key is that there needs to be a good reason why the answer wasn't filed timely. The judge decides is the reason or excuse is reasonable. Some of the more common reasons excepted by the courts include illness, hospitalization, handicaps, failure to be served with the Complaint, and reasonably believing that you and the plaintiff were engaged in settlement negotittions. The key is to make sure that you motion clearly provide a reasonable explanation as to why you did not file. The judge needs to understand specifically what happened and why it was not filed timely.
Meritorious Defense
Once you have established Excusable Neglect you need to show that you have a Meritorious Defense. Generally, to establish a Meritorious Defense you must show that there are facts that support the possibility of a defense. In most cases, this prong is fairly easy to establish.
Let's take a look at some sample defenses (to what appear to be defenseless cases) that might qualify as Meritorious. If you are sued for non-payment of a credit card you could argue that the debt is not yours, that you did not agree to the credit card terms, or that the terms of the agreement violate the law. In a non-payment of rent case, you might argue that the rent was not due because the landlord refused to make repairs or breached the lease.
Basically, as long as you can establish a factual basis for your defense you will be able to establish a Meritorious Defense.
Showing of Due Diligence Required in Some States
Some states, like Florida, require that the party requesting to vacate the default judgment show that they moved quickly after learning about the judgment. In other words, certain courts will factor in your response time to learning of the default. If you learned about the default in March and did nothing until November certain courts may deny your motion. My rule is that as soon as you learn that a default judgement was entered against you, immediately hire an attorney or start preparing your motion to vacate the default.
Summary
Court prefer to litigate cases on their merits instead of via default judgments. This means that the odds are in your favor if you can show both Excusable Neglect and a Meritorious Defense in your motion to vacate the default.
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