How to Avoid Credit Card Judgements

When credit card debt goes unpaid, a credit card judgment can be the result. If you allow your credit card bills to pile up and do not make a payment for six months, most credit card companies will charge off the account and sell it to a collection agency. This benefits the original creditor because the bad debt can be written off as a tax loss. A collection agency may decide to file a lawsuit against you to collect the debt. If the collection agency wins the suit, a judgment will be levied against you. Not only is a credit card judgment damaging to your credit score, in some states it may result in your wages being garnished.

Instructions

1

Request validation of the debt as soon as you become aware that it is owned by a collection agency. This can be done by writing a letter to the collection agency requesting proof that you owe the debt. The Fair Debt Collection Practices Act prohibits further collection activities---including lawsuits---until the collection agency accurately validates the debt.

2

Send your validation request to the collection agency via certified mail with a request for a return receipt. The return receipt will be mailed to you after your letter is delivered, and serves as proof that your validation request was received by the collection agency.

3

Wait for the collection agency to respond to the validation request. A collection agency has no time limit in which it is required to provide you with validation of the debt. During this time period, however, you cannot be sued for the debt. Most collection agencies will send you a printout of the debt. This is not validation as it does not prove that you owe the debt. Lack of proper validation is also a valid defense and will help you avoid a judgment should the case end up in court.

4

Check the statute of limitations for unsecured debt in your state. Each state has a time frame after which a creditor cannot use legal action to recover a debt. If a lawsuit is filed over a debt with an expired statute of limitation, the consumer has an airtight defense in court that will help him avoid a judgment.

5

Evaluate your financial status. If you are currently unemployed or living on Social Security or government assistance, a creditor cannot attempt to garnish your wages after a successful credit card judgment.

6

Inform the collection agency if you are living on income that cannot be garnished. If a creditor knows that you are immune to garnishment, it is unlikely to spend the necessary money to sue you and procure a judgment.

7

File a response with the court immediately if you receive a summons over the debt. Indicate that you intend to appear to contest the lawsuit. Also indicate if you are not currently working. Either scenario is often enough to cause the collection agency to drop the lawsuit.