Will a Judgment Affect Me Adversely?

If you have a debt which is subsequently sent to collections, you will drastically damage your credit score. Your credit score will be damaged even more significantly if your creditor decides to seek a judgment.

If you are served with a Notice to Appear in court with regard to an unpaid debt, your creditor is through trying to work with you to collect the debt. After receipt of the Notice, you will have 30 days to object to the filing. If you can prove that the debt is invalid, you can have the case dismissed.

Some creditors may threaten to file a law suit but are not serious. However, going to court will be the kiss of death for your credit score and, therefore, should be avoided at all costs.

An “unpaid” judgment will be shown on your credit report for 10-12 years. At the end of this 10-12 year period, if the judgment remains unpaid, it can be renewed. A paid judgment can be shown on your credit report for up to 7 years from the date paid.

You should make an effort to contact your creditor to negotiate a settlement, provided the debt is valid, you would prefer this route to letting a judge decide your fate, and the debt is still within the statute of limitations (check your state’s statute of limitations laws). Be sure to check your state’s statute of limitations laws prior to doing this. The reason for this is that if your debt is outside of the statute of limitations, you no longer have a legal obligation to pay the debt and offering to pay may start the clock ticking again for payment purposes.

If the court issues an official court order for payment of the debt, your credit score will suffer drastically. This negative mark will not show up on your credit report if you contact your creditor and negotiate a settlement prior to the entry of judgment.

Offering to negotiate a settlement is the best solution for all parties. Typically, creditors do not want to go to court and will accept a portion of the amount owed just to bring the matter to a close. If you do not have a lump sum to offer as payment, you can always attempt to negotiate a payment plan. If your creditor is not “in the mood” to consider any offers, you might think about calling the lawyer handling the case for your creditor.

Your credit report will show the debt as “legally void” if the judgment is dismissed. This is much less damaging than a “paid judgment,” which can be shown on your credit report for seven years from the date paid.

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.

An experienced credit attorney might be a good idea. You may, in the long run, save some money and lessen the damage to your credit score by employing a seasoned consumer credit attorney.

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