Suffering from a credit card judgement? Trying to figure out what a judgement against you means, what actions you can take to minimize the damage, and what options you have? If so, then you’re in the right place.
What Does a Credit Card Judgement Mean?
When you initially apply for an unsecured credit card, buried in the fine print, is an agreement that if you fail to pay, they can sue you. This is standard operating procedure.
For whatever reason, when the credit card account becomes delinquent or past due, the first action by the credit card company is to charge off your account. And then send your charged off debt to a collection agency.
This debt collector will naturally begin contacting you for payment, along with reporting negative information about the account on your credit reports. So long as this debt remains unpaid, collection agency after collection agency will purchase the rights to your account, and without payment will continue to report additional negative marks on your credit file.
At some point, typically after a number of different collection agencies have purchased and then resold your debt, a late stage collection agency will purchase the rights, and will frequently file a lawsuit against you. As in they’ll sue you in a civil court for payment.
You should be notified of your upcoming court date with a summons, however many consumer’s report they weren’t properly and legally notified. At any rate, on your court date, both you and the debt collector will have an opportunity to present your case and of course the judge will make a ruling.
If the judge finds in favor of the collection agency, you’ll get smacked with a judgement. This can potentially cause your wages to be garnished, liens to be placed against you and or your property, and possibly even asset seizure.
The exact collection methods vary by state, so investigate your local listings. Further, it’s possible that the debt collector will file a motion for summary judgement.
The idea behind this, is to avoid an actual trial, because of the overwhelming evidence against an alleged debtor. This is somewhat frequent with credit card debts, because during the application process, often unbeknownst to the applicant, they’ve agreed and entered into a legal contract.
It’s also possible to have a default judgement awarded against you. This will happen if you fail to appear on your court date. The judge has no choice but to find in favor of the plaintiff. This is one of many reasons why it’s so important to appear on your court date, even if you don’t have a valid defense.
Simply showing up, puts you in far superior standing in the eyes of the law, judge, and even creditor. Most people just ignore these cases. Often out of fear, and understandably, it’s intimidating.
How Long Is a Judgement Enforceable?
A judgement is enforceable for 10 years from the date it was entered by the court. In other words, they can attempt to collect payment for 10 years. And in the majority of states, it is very easy for a creditor to get a judgement renewed.
To clarify this means, if they don’t get paid, and because they’ve invested time and money to get this judgement against you. It’s very likely the judgement will be renewed before the ten years expires.
How Long Does a Judgement Stay On Your Credit Report?
A judgement will remain on your credit report for a maximum of seven years, from the date it was entered by the court. If the judgement is renewed, you’ll still be legally responsible for payment, however it should not remain on your credit reports.
Judgements are one of the most damaging items to have on your credit reports. It’s virtually guaranteed to cause you to have a poor credit score. However every year, millions of judgements are removed from consumer credit report’s, and long before seven years, slowly ticks away.
How To Deal With a Credit Card Judgement
1. Fight It
The first choice you have when dealing with a credit card judgement is to actually fight the ruling. You can do this for a myriad of reasons, in many states if there was a mistake, neglect, or you simply had a good reason for missing your court date.
To do this, you’ll need to file a motion to vacate the judgement with the court house. This is where you’ll make your arguments. And should your judgement be vacated, this doesn’t mean the lawsuit is eliminated.
You’re simply challenging the ruling. Please, every state has unique laws, so investigate your local listings. Because you’re going to need a valid reason for the judge to find in your favor.
And here’s the good news, sort of, there are an abundance of illegal lawsuits filled, and even more quasi-legal lawsuits. For example a few years ago, Midland Funding, was sued by a number of individual state Attorney Generals for filling fraudulent lawsuits.
One of their employees testified that he personally was responsible for signing between 200 to 400 affidavits daily. This testimony proved Midland Funding was acting illegally and filling fraudulent lawsuits.
Moreover, experts estimate over 90% of lawsuits by collection agencies result in a default judgement. This is when the accused debtor, doesn’t appear for their court date. And this is what the collection agencies want.
And as a result, these collection agencies very often don’t have the evidence to prove the debt. However because the defendant doesn’t show up to defend himself, the evidence isn’t even looked at, nor heard. The judge is forced to award in favor of the plaintiff.
The last two common reasons to file a motion to vacate is if you weren’t notified properly of the court date. Many consumers say they never receive a court summons. This is in violation of procedure and a valid reason for the judge to find in your favor.
The final reason concerns the statute of limitations. This is a state law, and does vary, so check your local listings. But, this law regulates how long you, me, and every consumer is legally responsible for payment of a debt.
Typically it’s seven years from the date of last activity. This applies to the majority of types of consumer debt, and certainly to credit card debt. A few of the exemptions include federal taxes, federal student loans, and that’s about it. Everything else is governed by the statute of limitations.
One of the frequent ploys of late stage collection agencies is to file a lawsuit, either right before the statute of limitations expires, and often long after this time period has expired. One of our members, who we’ll call James, recently shared he’s being sued for a charged off credit card, from 2004.
The takeaway is just because you’ve been found guilty and had a judgement awarded against you, this isn’t necessarily the end of the road. If you have a good reason to fight, you should.
2. Satisfy The Judgement
Your next option is to satisfy or settle the judgement. In other words, to pay off the judgement. However there’s some important keys here, the first is even with a judgement, this is only a piece of paper. It ain’t cash, payment, or the money they ultimately want.
This means, you can often negotiate to settle for less than the total balance. It’s true, the judgement creditor will probably have less flexibility to negotiate with you, because they’ve invested resources (time and money) to get this judgement.
And as such have you by the short and curlies. Nevertheless they’re often willing to work with you for a lump sum settlement or even with a repayment plan.
If you go down this road, upon payment, the judgement on credit report files should be updated to a satisfied judgement. Essentially the mark is changed from an unpaid judgement, to a paid judgement. This is slightly better for your credit, but still a poor credit mark.
3. File For Bankruptcy
Look, life happens to us all. If you’re in a very tight place financially, bankruptcy may be the right choice. And should you chose this path, many judgements, especially for credit card debt, will be discharged in bankruptcy.
Additionally, if you have a very modest income and resources you can become “judgement-proof.” This is legal exemptions to protect your assets, wages, etc. from being seized or garnished. The idea is to prevent a little old lady, blind person, etc. from being thrown out of their house because of a credit card debt.
Obviously we don’t know your specific circumstances, and as such can’t make a personal recommendation as to the best path for you. Naturally only you know what the best choice is, and any personal legal representation you may choose to consult with.
How To Remove Judgement From Credit Report
If you’ve a judgement on your credit report and have tried to finance a purchase, or use your credit, you’ve discovered first hand the damage it causes. This is one of the worst items to have, just short of a foreclosure and a bankruptcy.
One of our member’s says his credit score dropped by over 200 points, when he was smacked with a judgement. And if you plan to buy a home, car, or make any significant purchase using your credit in the next seven years, it’s essential to clear credit history of this mark.
There’s a number of ways, but the most common method is to file a credit bureau dispute. This is your right as a consumer, granted by the Fair Credit Reporting Act (FCRA). And essentially we’re challenging the accuracy of the judgement.
You see, once the credit bureaus get your dispute, they’re required to investigate the item. During which they’ll contact the court house, and request the judgement be verified.
Now look, every court house in this great country is overworked both criminally and in their civil courts. And yes it’s possible your judgement will be verified by the court house, but there’s a good chance it won’t be verified when the credit bureaus investigate.
If it’s not verified, then the item must be removed from your credit report. This is how to remove a judgement from credit report files, and legally. Additionally it’s important that you also work to remove any other credit report marks, related to this account.
For example, you likely have a charge off mark from the original credit card on your credit reports. Along with at least one, often many, collection agencies for this debt. We must clear bad credit from your credit file, to most effectively improve your credit score.
This is because your FICO credit score is a lot like your Grade Point Average (GPA) in high school. It’s an average, and the judgement on your credit reports or any other derogatory mark is exactly like failing a course for your GPA. We must remove these negative items.
In sum, you do have many options to fight back. Regardless if this judgement is correct or legit or not, you have weapons and laws to protect yourself, your finances, your assets, and your credit score.
They’ve helped their client’s remove every type of derogatory mark including: judgements, charge offs, collections, late payments, repossessions, and many more. Did you know, in just 2016 alone, over 10 million questionable items were removed from consumer’s credit reports, many of these being judgements.
Take action today and get a free credit consultation with a certified FICO professional by calling toll-free 1-877-418-7596. And for full details check out our Credit Pros reviews article. And of course sign up for our free newsletter for more tips, techniques, and help with fixing credit.
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