What Is a Credit Judgment and What Can You Do About It?
July 16th, 2009, Written By: Kerri Randall
If you’ve had a credit judgment placed on your credit report, you already know what it is, and there’s really nothing you can do at this point. If you’ve received notice that you’re facing a credit judgment, you’re in serious trouble, and the time to act is now.
A credit judgment means you’re being taken to court for failure to make good on an old debt. Perhaps you were even sent to collections over this delinquent account but you ignored the warnings or were unfortunately unable to pay. If the creditor believes they have a decent chance of receiving their money from you, the next step is to request a judgment from the court.
Unless the debt in question isn’t yours, chances are very high that the court will rule in the creditor’s favor. You don’t even have to be present for any actual proceedings. (If the debt really isn’t yours, then definitely attend and fight it all the way!) Once the judgment is ruled, your credit score will drop dramatically, and it can be extremely difficult to recover until you’ve paid off the debt.
But your credit score is the least of your worries right now; it gets worse. The common way for the court to ensure that the creditor will actually be repaid is garnish your wages. This means a certain amount of your paycheck will be withheld from you and sent to the creditor until the debt is paid in full. It can be embarrassing because now your employer will know your personal financial and credit information. Worse still, it’s obviously going to become harder to pay your bills and afford even simple life necessities, especially if you’re already living paycheck to paycheck.
Once you’ve been notified of a potential judgment proceeding (or even if you think you’re at risk for that), you only have a couple options left, but it’s best to consider at least one of them. First, you can file bankruptcy. This will also shoot your credit score down and you’ll still have a big hole to crawl out of, but it will protect your paycheck. Your other option is to contact a lawyer or a credit agency that can help you negotiate a payment arrangement with the creditor. The payment plan reached with the creditor may still be a bit damaging to your paycheck, but that may be your better option if it helps you avoid a judgment.
Categories: Handling Collections
