If you have unpaid credit card debt and you are unable to work things out with your credit credit card company, they may attempt to sue you. If they win their case, you will have a judgment against you for the amount that you owe, plus any court costs. If this occurs, a statute of limitations, credit reporting and repossession/garnishment laws can all come into play and determine how a judgment will affect you.
Credit Reporting
A judgment is a matter of public record and can be noted on your credit report for up to seven years. If a judgment appears on your credit report more than seven years after it was entered, you have the right to have it removed. To do this, you need to contact the credit bureaus and request that the out-of-date information be deleted.
If your judgment is later vacated or dismissed, you should check with all three credit bureaus six to eight weeks after the change to make sure that the information in your credit reports has been updated.
Statute of Limitations
Creditors are bound by the statute of limitations in the state where they are trying to collect a debt. Statutes of limitations vary from state to state, but a creditor cannot legally try to collect a debt from you (and this includes trying to get a judgment against you in court) after the statute of limitations has passed.
If a creditor does get a judgment against you, there is also a statute of limitations on how long they have to actually collect the judgment amount from you. However, the statute of limitations on collecting a debt can be for very long time (12 to 20 years), and in some cases can be renewed via court order.
Repossessions and Garnishments
Because credit card debt is an "unsecured" debt, not backed by collateral, the credit card company cannot repossess anything that you bought with the credit card. The credit card company can, however, garnish your wages, seize money in your bank accounts, and possibly get a lien on your home in order to recoup the money you owe them.
Vacating or Dismissing a Judgment
If you have a judgment against you and you feel that it was issued in error, you can ask the court to "vacate" the judgment and have it expunged from your record. You will need to prove in court that the judgment should not have been issued against you in the first place--for example, if the judgment was for a debt that was older than the statute of limitations allows to be collected.
If you have the cash, you may also want to contact your creditor and offer to pay off the debt in exchange for the judgment being dismissed. If you go this route, get their agreement in writing, and be prepared to pay for any court costs involved in getting your case dismissed.
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