Credit card judgment is when a creditor attempts to collect a debt from a credit card holder via the legal system. When you signed the agreement with all of the fine print to get your credit card, you gave the credit card company permission to sue you if ever you default on your loan. Despite this legal option, most creditors are unwilling to go to this extreme and would rather satisfy the debt outside of court. However, that being said, credit card judgments are real, they do happen, and it is easier to avoid them than to stop them once they have been started.
Avoiding Credit Card Judgment
It is almost always better for all parties to settle disputes outside of court. Court costs and attorney fees can be pricey and the experience itself can be quite stressful. Some collection agencies play off that fear and threaten judgment on behalf of the creditor. If this is the case, you may not be too late to avoid going to court. You need to do your best to work out an acceptable payment plan, one that you can realistically uphold and one that the creditor will be in accord.
Usually a credit card company will be willing to make alternate payment arrangements in lieu of going to court because, most likely, an attorney hired in your state would cost them more money than if they just collected the debt directly from you.
If the creditor has already hired an attorney who is threatening judgment, you typically still have an opportunity to make good on your debt at this time. The attorney is most likely from their legal department or from their own state and is willing to offer you a final chance payment plan. If the attorney does not present you with this option, you should go ahead and contact him with your own suggested payment plan and include a check in good faith. As long as the offer is sincere and practical, the attorney will usually accept it on behalf of the creditor.
Judgment Day for Credit Card Debt
A creditor will usually start a judgment against you if you have failed to make credit card payments for at least six months and you have made no effort to resolve your debt. Once the judgment is started, it is difficult to stop and in some states you are not allowed to stop it. Therefore, if a judgment has been placed on you, you need to prepare for your day in court.
All records that you have that prove your attempts of resolution, including canceled checks or bank statements, are good documents to bring that could work in your favor. Don’t forget any letters you sent, especially ones sent by certified mail, that show your contact with the creditor to explain your situation and request or suggest a resolution. If you have evidence that the debt is beyond the statute of limitations, bring that to court as that can dismiss the case outright. If you did not pay your debt because it was in dispute, it is critical for you to bring all of your supporting documentation with you as well.
Since most creditors sue credit card holders for valid debts, chances of a judgment against you are fairly high. This then results in a ruling in which you are given a set time period, usually thirty days, to comply with the judgment and repay your debt. If you do not act in accordance with the judgment the creditor can then go back to court and request a Judgment Execution Order. This order then sets in motion various actions that the creditor can take against you in order to reclaim the value of his lost monies.
Actions in a Judgment Execution Order
The actions of a Judgment Execution Order vary by state, but can include freezing your bank accounts, garnishing your wages, placing a lien against your property, and seizing your personal property. If your bank accounts get frozen you will be unable to withdraw your funds until court resolution has been achieved.
arnishing your wages legally demands your employer to take a certain percentage out of your paycheck and pay it to a third party, such as your creditor. A lien against your car will keep you from selling it, likewise a lien against your home. If you have a lien against your property you will also be unable to refinance your loan or obtain an equity loan. This will stay in force until the lien is paid. Personal property such as furniture and equipment can also be seized and is usually done through a civil enforcement agent such as a deputy sheriff.
Since most judgments are valid for ten years, it is hard to hide from them. If you try to work out a resolution with your creditor immediately after judgment they may be willing to negotiate, such as by not seizing your personal property in exchange for guaranteed monthly payments. However, if you’re going to attempt a resolution it is still in your best interest to work out an agreement with your creditor before going into judgment.
Judgments, second in line to bankruptcy, can virtually destroy your credit. This could have a serious impact on employment, insurance, and future loans and lines of credit. If you are having difficulty with a creditor, work on resolving your account immediately to avoid judgment.
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