How To Avoid Judgments

A judgment occurs when a creditor who is owed money for a legitimate debt has been trying to collect and has been unsuccessful. As a last resort, the creditor will go to the court and ask for a judgment against the person or entity who owes them money. A judgment is filed by the court against the debtor for the amount of the debt, where it goes in county records and is put on the debtor's credit report. Judgments, even when paid, stay on your credit report for 12 to 20 years and can seriously affect your ability to get a loan or buy a home. There are ways to avoid judgments, but they involve an ounce of prevention.

Instructions

1

Obtain a copy of your credit report to become aware of your debts. A lot of people are not aware of joint debt with spouses, or have forgotten about old debts that could come back to haunt them. Creditors have seven years before the statute of limitations wears out and the debt is no longer legitimate.

2

Talk to your creditors, taking notes on who you spoke to, what was said and when you spoke. It's never pleasant to talk to someone you owe money to, but avoiding the problem doesn't make it go away. It leaves the impression that you don't care and forces a creditor to take action.

3

Come to a settlement. Since getting a judgment against you does not guarantee they will ever get any money, most creditors are happy to make an arrangement. It could be paying a reduced amount or it could be a payment plan.

4

Get the agreement in writing. This protects both of you and keeps you honest.

5

Stick to the plan and keep receipts you receive; or copies of the cancelled checks or money orders you used for payment. As long as you are fulfilling your end of the agreement, then they cannot take any further action against you.

6

Dispute any further negative reports on your credit that occur after your agreement using your proof of payment and a copy of your agreement. If they try to place a judgment, you will have the opportunity to show that you have an agreement and that you are paying according to schedule.

7

Talk to an attorney if you have a lot of debts against you and have no way to repay. You may wish to consider bankruptcy before those debts become judgments. Bankruptcies are a way to start fresh and impact your credit for less time than a judgment does.