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.
If your credit report lists an “unpaid” judgment, it will remain on your credit report for 10-12 years. If the judgment remains unpaid at the end of this time, it can be renewed. A judgment which has been paid can remain 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 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.
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.
If a judgment is dismissed, it will be reported on your credit report as “legally void.” This is considerably less harmful than a “paid” judgment. Paid judgments remain for seven years on your credit report from the time 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.
You might consider hiring a good consumer credit attorney. It may cost you a little bit, however, you may find that, by having an attorney handle the negotiations, you may save money as well as minimize the damage done to your credit score.
I Freed Myself from the Midland Credit Management Collection Agency. See How I Did it at www.MidlandCreditDebt.com