Judgments
Judgments are court decisions that are
archived in public records at the county courthouse. Any
judgment that a creditor wins will appear on your credit report
for 7 years and will have a detrimental impact on your credit
score.
Creditors sometimes
pursue judgments when they feel that you can pay the debt but
are trying to avoid fulfilling your obligations. Judgments can
be expensive to pursue. For this reason, most credit card debts
under $5000 are not pursued beyond the normal collections
process. If an attorney is acting as a debt collector, she may
be more likely to pursue a judgment since it is her time, not
her money that she is giving up. Larger credit card and other
debts may be pursued if the creditor believes that you have the
capacity to pay and if it is worth the expense to take you to
court.
Ignoring a court
summons is never a good idea. A default judgment can be rendered
if you fail to respond to the summons properly. Also, some
creditors may request a summary judgment when they can prove
their is no dispute to the validity of the debt. This allows
them the chance to win a judgment without having to go to court.
If you receive a
court summons, it may be worthwhile to attempt a
settlement with that creditor.
They may be willing to accept a reduced amount if you are able
to pay the settled amount in full before the court date. If you
settle, make sure that you get their promise in writing that the
debt is satisfied in full upon receipt of that payment (also
write "for full payment of debt" on the check).
If you do go to
court, be sure to arm yourself with knowledge about how the
proceedings work. You may wish to witness a prior session so
that you can familiarize yourself with the process. Gather all
written and photographic evidence that supports your defense. If
you have witnesses, make sure they attend during your day in
court. Any written statements that they make will not be
admissible and will be ignored by the court unless they attend
in person.
If you lose a
judgment, much of your property could be exempt from seizure.
Creditors know this and will take this into account before
pursuing a judgment. Still, it is important to protect yourself
and your assets by filing a notice of exempt property if the
judgment favors the creditor. You may also need to protect
yourself from garnishment. Some creditors pursue garnishment of
wages once they have won a judgment. It is recommended that you
seek qualified legal counsel for this process.
If you already have
judgments on your credit report, your credit score will suffer.
Recognize that this will raise your cost for credit until the
judgments finally fall off your credit report. Judgments remain
on your credit file for 7 years.
© 2004-2010 Vision Credit Education, Inc. All rights reserved.
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