Effects of a Judgement
How Will a Judgement Affect Me?
Once your debt hits collection status, your credit score takes a hit. If you think that's bad, wait until you see what a judgement does to your credit score!
If you have just been served with a Notice to Appear in court for a judgement proceeding, be aware that your creditor may be done playing games. You should be given thirty days from your notice in which you can object to the filing. If you can prove the debt is invalid then you can have the court dismiss the lawsuit.
A judgement is your creditor's most powerful weapon! A judgement is a creditor's greatest ally to force you into paying back a debt.
On the other hand, if a creditor merely threatened you with a judgement, they may or may not be serious. In any event, in most cases it is a good idea to avoid going to court over a debt.
Effects of a Judgement
- an unpaid judgment remains on your credit report for 10-12 years - and can be renewed if not paid
- a paid judgment remains on your credit report for 7 years from the time of payment
- asset seizure
- property lien
- home lien
- wage garnishment
(check your local and state laws)
How to Avoid a Judgement with Debt Negotiation
Assuming the debt is yours (and legally enforceable - review your state's laws on statute of limitations), your first step is to contact the creditor. Again, check your local statute of limitations. Making an offer to pay a debt could re-start the clock to the beginning and nullify any statute of limitations claim you might have.
You nonetheless want to avoid entry of judgment if at all possible. Once the court orders you to pay a debt with an official court order your credit report takes a heavy blow.
If you can resolve the issue before entry of judgement, you can still avoid this negative mark being placed on your credit report. Often a creditor will accept a portion of the amount over the hassle and fees associated with going to court. At this stage of the game, make every effort to resolve your situation.
Perhaps you offer a payment plan rather than pay a lump sum fee. If your creditor refuses to accept any offers, consider speaking to the attorney handling the matter on behalf of the creditor. If you can, through cash negotiation, persuade the creditor to dismiss the judgement, your credit report will not look as bad.
A dismissed judgement is reported "legally void," and is not nearly as harmful as a "paid judgement." A paid judgement remains on your credit report seven years from the time of payment. (Of course the ideal scenario is to negotiate for a full deletion of any negative information)
Any such agreement you strike should be confirmed in writing with signatures from both parties.
However, once the court gets involved, your ability to negotiate is nearly finished.
How to Check the Validity of a Judgement Debt
Have you always heard about how lawyers can get a case thrown out of court on a legal technicality? Well, some 'tricks' and loopholes can be employed to avoid a judgment. For instance, check your state's laws on the statute of limitations (SOL). A debt is not legally enforceable if it is beyond the statute of limitations. However, this does not stop creditors from trying to collect a debt. It is your job to research this critically important legality.
You can also seek a Motion to Vacate your judgement.
If you are facing a judgement and want help, now is the time. Don't wait until it is too late to explore every option. Often this is a great time to enlist a good credit attorney - making a small investment now can really save a lot in the long run.
