Legal Definitions - judgment debt

A judgment debt is a specific sum of money that a court has legally ordered one party to pay to another. This financial obligation arises after a lawsuit concludes and the court issues a monetary judgment, determining that one party owes money to the other.

The party who is ordered to pay the money is known as the judgment debtor, and the party to whom the money is owed is the judgment creditor. The judgment creditor has the legal right to collect this debt. If the judgment debtor does not pay voluntarily, the judgment creditor can pursue various legal methods, often with the court's assistance, to enforce the judgment and recover the owed money.

• Example 1: Breach of Contract

  Scenario: "Tech Solutions Inc." hired a software development firm, "CodeCrafters," to build a custom application. Tech Solutions paid an initial deposit, but CodeCrafters failed to deliver the software by the agreed deadline and eventually ceased communication. Tech Solutions Inc. sued CodeCrafters for breach of contract to recover the deposit and additional costs incurred due to the delay.

  Explanation: The court ruled in favor of Tech Solutions Inc. and ordered CodeCrafters to refund the deposit and pay damages. This court-ordered payment is a judgment debt. CodeCrafters is now the judgment debtor, and Tech Solutions Inc. is the judgment creditor, possessing the legal authority to collect the money CodeCrafters owes.

• Example 2: Personal Injury Claim

  Scenario: While walking in a park, David was hit by a bicycle ridden negligently by Emily, resulting in a broken leg and significant medical expenses. David sued Emily to cover his medical bills, lost income from being unable to work, and compensation for his pain and suffering.

  Explanation: After hearing the case, the court found Emily responsible for David's injuries and ordered her to pay a specific amount to cover his expenses and damages. This financial obligation imposed by the court on Emily is a judgment debt. David, as the judgment creditor, can now take legal steps to collect this money from Emily, the judgment debtor.

• Example 3: Unpaid Business Invoice

  Scenario: A graphic design studio, "Pixel Perfect," completed a branding project for a new restaurant, "The Gilded Spoon." Despite multiple invoices and reminders, The Gilded Spoon refused to pay the final balance for the completed design work. Pixel Perfect then filed a lawsuit to recover the unpaid amount.

  Explanation: The court determined that The Gilded Spoon owed Pixel Perfect for the services rendered and issued an order for the restaurant to pay the outstanding balance. This court-mandated payment is a judgment debt. Pixel Perfect is the judgment creditor, and The Gilded Spoon is the judgment debtor, legally obligated to pay the amount specified in the court's judgment.