Should I Be Worried About a Judgment?

As you can imagine, when your debt is sent to collections, your credit score will be damaged. If from there your creditor seeks a judgment for payment, your credit score will plummet even further.

At the point you receive a Notice to Appear in court, you can be assured that your creditor is no longer willing to try to collect the debt. You are allotted 30 days to respond to the Notice. The case will be dismissed if you can prove that the debt is invalid.

If a creditor merely threatens to go to court, it may or may not be serious. In any event, you should view going to court as an absolute last resort.

A credit report which lists an ”unpaid” judgment will continue to show that unpaid judgment for 10-12 years. A renewal of this listing may occur if, at the end of this period, the judgment remains unpaid. Your credit report will list a paid judgment for up to 7 years from the date paid.

It is wise to contact your creditor to arrange a lump sum payment or a payment plan. However, do this only after checking your state’s statute of limitations laws to determine if your debt falls within or outside of the laws. If your debt falls within the statute of limitations, you are still obligated to pay the debt and you should try to negotiate payment. Adversely, if your debt falls outside of the statute of limitations laws, you no longer owe the debt though, if you offer to make payment, you will start the clock running all over again.

If you are ordered by the court to pay a debt and an official court order is issued, the impact on your credit score will be devastating. However, if you decide to contact your creditor and arrange for payment, you may be able to avoid this traumatic black mark.

It is best to try to negotiate a settlement with your creditor. It is often the case that a creditor will accept a portion of the amount owed in exchange for the time and expense of going to court. Alternately, you could offer a payment plan. If your creditor will not accept any offers, you should consider talking to the lawyer handling the matter for your creditor.

A ”legally void” entry will be shown on your credit history if a judgment is dismissed; this type of entry is much less harmful than a ”paid judgment.” Your credit report can show a ”paid judgment” entry for seven years.

The best outcome would be to negotiate a full deletion of all negative information. If you are successful in negotiating this, make sure you get the agreement in writing and that you obtain the signatures of both parties. Keep in mind that once the court becomes involved, your chances of negotiating a settlement are next to none.

It would be smart to consider seeking out the advice of a seasoned consumer credit attorney. The typical consumer credit attorney has handled hundreds, if not thousands, of these types of cases and can benefit you with his experience and knowledge.

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