Old Judgments Can Come Back to Bite You – Hazards of Defaulting on Promissory Notes

A recent case from the Connecticut Supreme Court serves as a reminder that civil judgments are good for 20 or 25 years in Connecticut depending on how you seek to enforce the judgment.  The decision was in the case of Investment Associates v. Summit Associates, et al.  In this case, a debtor failed to pay on a promissory note and left a balance of about $272,000.00. The note holder sued in state court to collect on the note.  The debtor defended the case but moved to another state.  However, the plaintiff note holder ultimately prevailed obtaining a judgment in the outstanding amount.

The plaintiff brought the lawsuit in 1991 and obtained judgment in 1994.  The defendant left the state in 1992.  15 years after obtaining the judgment, the plaintiff moved to revive the old judgment in Connecticut.  Under Connecticut General Statutes 52-598 (c), the judgment remained valid.  The Court noted that the Connecticut legislature wanted to address situations where a defendant could avoid a Connecticut judgment by moving to a state that had a shorter time period for enforcing judgments.  In this case, the defendant left to South Carolina which had a ten year statute. 

Many business owners believe that if they have no assets and no cash they are "judgment proof." This means that even if they lose a lawsuit, there will be no cash or assets available to pay the judgment.   The old saying goes that you cannot get blood from a stone.  However, this case serves as a reminder that to remain judgment proof in Connecticut, your stone cannot have blood for 20 to 25 years.