If you are more than six months behind in your credit card payments and you have made no attempt to work out a solution with your lender, you may face a judgment against you. Although the situation may be troubling or even frightening, you still have options. The only option you should not take is to do nothing and hope the judgment will go away. It won't.
About Judgments
Once you are more than six months late with your credit card payment, your credit card issuer typically sells your account to a collection agency. One option the collection agency has is to file asuit against you. The agency hires a lawyer who contacts you, giving you another chance to pay your bill. This is a possible chance to negotiate for less than what you owe. If the collection agency agrees and you pay, you stop the judgment process.
Court Date
If you cannot pay or if the collection agency does not accept your terms, such as making payments to them, the judgment process moves on, and you receive a notice from the court informing you of your debt and that the collection agency is suing you. You now have a court date. You have a chance to defend yourself in court to a judge, who determines how you must repay the debt. Do not be a no-show for court. If you miss court, the best-case scenario is that you automatically lose your case, and the court grants your creditor a legal judgment against you. The worst-case scenario, depending on where you live, is that you could be arrested and do jail time. In Minnesota, for example, if you don't show up for court, a warrant is issued for your arrest. If you are stopped for a traffic violation, for example, and the officer sees your warrant, you could go to jail. Other states that have this policy include Arkansas, Arizona and Washington.
Liens and Garnishments
After your creditor has a judgment, you receive a Notice of Judgment, which tells you that you have 30 days to pay your debt. If you still don't pay, your creditor seeks a judgment execution order against you that allows the creditor to put a lien on your property, garnish your wages, levy your bank account or seize your property, depending on the laws in your particular state. Judgments remain active for up to 10 years, depending on the state; after that, the judgment is typically over, and your creditor cannot try to collect any more unless he renews the judgment, which he can do two times. Before you decide to wait it out, understand that having a judgment against you probably means that you won't be able to get credit, and you may be passed over for a job.
Bankruptcy
Your other option when you have a judgment against you, particularly a large one, is to file bankruptcy. However, bankruptcy is generally the last resort option because it stays on your record for 10 years and generally looks even worse to creditors than having a judgment against you does. But a bankruptcy gives you a fresh start. The court will probably discharge your credit card debt, meaning you won't have to pay it back.
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