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.
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