Cleaning up your credit history may involve satisfying old judgments. An unpaid judgment on your credit report can reduce your score, and this can look bad when applying for other loans or credit cards. Failing to pay a judgment can prompt a response from your creditors. It is prudent to take steps to avoid the repercussions of an unpaid judgment. However, a creditor cannot sue you for an unpaid judgment.
What is a Judgment?
Credit judgments are orders by a court to pay a creditor. Judgments are one type of negative item that can appear on your credit report, and judgments can blemish credit reports for a period of seven years. Reduced credit scores, credit rejections and higher interest rates are common results of a judgment on your credit report.
Process of a Judgment
Creditors and collection agencies receive a judgment order against you after filing a lawsuit and suing you in court. The court hearing provides you and the creditor the opportunity to go before a judge and address the situation. You can challenge the lawsuit and show evidence as to why you don't owe the creditor. The judge rules after hearing both sides, and if found liable for the debt, you're ordered to pay the creditor.
Ignoring a Judgment
After a judgment, you're given 30 days to pay the balance or satisfy the debt. Options include paying the outstanding debt in full or paying the debt with installment payments. If a judgment goes unpaid, the creditor or collection agency will not file another lawsuit or sue you again. However, the creditors can return to court and notify the court of the unpaid judgment. Returning to court gives creditors the opportunity to collect the debt in other ways.
Recovering an Unpaid Judgment
Creditors can apply to collect an unpaid judgment using several different methods. They can approach the court for an order to seize or place a lien on your bank account, whereby the bank freezes all funds in the account. Creditors can also collect an unpaid judgment through a wage garnishment, where your employer withholds a percentage of your pay each check, and then forwards this money to your creditor as repayment for an unpaid debt.
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