US Legal Forms
Legal Resources
Questions & Answers
Contract for Deed
Are Funds From a Contract for Deed Exempt from Creditors?

Are Funds From a Contract for Deed Exempt from Creditors?

Full question:

I've been assigned a judgment against a debtor who sold a house CFD (MN). Is the income from that CFD exempt from collecting? Can I try to collect from the person paying the CFD? The debtor lives in Texas, the CFD home is in MN.

Category: Contract for Deed
Date: 04/07/2025
State: Minnesota

Answer:

A contract for deed, or land contract, is often used as an alternative means of financing the purchase price of property. The buyer does not receive an actual deed until payments are made under the terms of the contract for deed agreement. Until the buyer receives a deed, ownership isn't transferred and the property is subject to being foreclosed on if the mortgagee/owner defaults on the mortgage. The responsibility for payment for the property is a separate issue from the ownership of the property. The funds received by the seller are generally not exempt funds and are subject to collection efforts by debtors of the seller.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

How do I collect on a judgment in MN?

To collect on a judgment in Minnesota, you can start by obtaining a writ of execution from the court. This allows you to seize the debtor's property or garnish their wages. You may also file a lien against the debtor's real estate. It's advisable to conduct a debtor's examination to discover their assets. If the debtor is uncooperative, you may need to pursue further legal action to enforce the judgment.

Can you get out of paying a judgment?

While it can be challenging to avoid paying a judgment, some options exist. You may appeal the judgment if you believe it was made in error. Additionally, you can negotiate a payment plan with the creditor or seek bankruptcy protection, which may discharge certain debts. However, these options can have long-term financial implications, so consulting a legal professional is recommended.

What happens if a debtor fails to pay?

If a debtor fails to pay a judgment, the creditor can take legal steps to enforce the judgment. This may include garnishing wages, seizing bank accounts, or placing liens on property. The creditor may also initiate further legal proceedings to compel payment. It's important for debtors to communicate with creditors to explore payment options or negotiate terms.

How do you avoid paying a judgment?

Avoiding payment of a judgment can be difficult and may lead to further legal issues. Options include negotiating a settlement with the creditor, filing for bankruptcy, or appealing the judgment if you believe it was incorrect. However, these actions can have serious financial consequences, so it's wise to seek legal advice before proceeding.

Can you sell a house with a judgment against you?

Yes, you can sell a house with a judgment against you, but the judgment may complicate the sale. If there is a lien on the property due to the judgment, the lien must be satisfied at closing. This means that the proceeds from the sale may need to be used to pay off the judgment before you receive any funds. Consulting a real estate attorney can help navigate this process.

Can you go to jail for not paying a judgment?

In general, you cannot go to jail simply for not paying a judgment. However, if you fail to comply with a court order related to the judgment, such as appearing for a debtor's examination, you may face contempt of court charges, which can lead to jail time. It's crucial to address any court orders and communicate with creditors to avoid legal complications.