A judgment is entered against you when you owe creditors and ignore their requests for payment on past-due balances. There are many ideas on how to avoid judgments. Some believe paying at least a dollar on past-due balances keep creditors from entering a judgment against you. Communicate with your creditors. Avoid judgments by generating a payment plan that works within your budget.
Origin
Judgments are issued under a variety of circumstances. You used a service you never paid for. You went to the hospital without insurance. You used a credit card. You ignored or couldn't pay the bills when they arrived later in the month. A representative from the company calls you in regard to paying on your account. The calls are avoided. Soon you receive calls from collections agencies asking for money on behalf of the original creditor.
Collections
Companies have an accounts receivable department. Accounts receivable handles accounts that owe money to a company. An accounts receivable representative contacts you and requests payment of past-due balances within a certain amount of time. Eventually, unpaid accounts are moved from accounts receivable to a collections team. Collections teams are a separate office within the company or an outside hire. Exactly when your account is moved to collections varies with the policy of the company.
Pre-Judgment
Collections teams contact you before pursuing judgment action. You receive paper notices and phone contact in an attempt to collect on your account. However, don't blindly send money to your creditor. Appropriate processing is necessary so your account is credited correctly. Talk to the collections department to set up a payment plan for past-due balances. Accounts placed in collections affect your credit. Credit repair experts advise paying before further damage is done to your credit.
Myths
Many people assume paying a minimal amount on debt, even one dollar, shows good intentions to pay. It is at the creditor's discretion whether receiving only one dollar a week or a month satisfies the definition of a payment. Even if you are showing good intentions, the company can still have a judgment entered against you. Communication with your creditors is the key. If your financial situation is unknown by the company, it will commence with judgment proceedings.
Avoid Judgment
Contact the accounts receivable or collections department of your creditors. Inform them of your financial situation and your desire to pay all amounts owed. Keeping a calm head and not letting your account situation spiral out of control is the best path to working out a payment plan. Keep receipts of all payments made and stay current with your negotiated payment schedule. Defaulting on a payment plan makes you a candidate for future judgment proceedings.
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