Judgments give creditors options for property seizure, financial levies and property liens. Judgments can also negatively affect a consumer's credit standing for up to 25 years, depending on their state of residence. The statute of limitations on debt from judgments has two considerations. One is the statute of limitations on debt before a judgment; the other reflects the lifespan of the judgment's validity.
Definitions
A judgment is a legal recourse offered to creditors against debtors who owe them money. Judgments must be obtained through a court order in the county where the debtor resides. Judgments give creditors the power to seize property and levy financial accounts as a way to satisfy the judgment. A statute of limitations is the length of time available to creditors to petition the court for a judgment. Statute of limitations may also refer to the length of time a judgment is valid, after the court ruling. Each state has different laws regarding judgments and statutes of limitations on debt.
Statute of Limitations Before a Judgment
Creditors have a set period of time during which they may initiate a lawsuit against a debtor to obtain a judgment. This time frame varies by state law, ranging from three to 10 years for credit card (open contract) debt. If creditors file a judgment lawsuit after the statute of limitations has run out, the debtor must use the statute of limitations as a defense. If a debtor ignores the court proceeding, assuming that the judge knows the debt is out of statute, the debtor may receive a judgment by default. Default judgments occur when one party to the lawsuit does not appear at the hearing.
Judgment Statute of Limitations
Once a debt judgment is issued, the length of time it is valid also varies by state. Some states allow judgments to be renewed; others consider the judgment satisfied after the statute of limitations expires. The minimum length of time that a judgment is valid in any state is three years. The maximum time limit is 25 years in Connecticut, but this is an exception; a typical maximum time limit for judgments is 20 years.
Judgments and Credit Reports
Judgments stay on a consumer credit report for at least seven years or until the state judgment statute of limitations runs out, whichever is longer. For example, if the statute of limitations on debt from judgments in your state is 10 years, the judgment can appear in the public information section of your credit report for 10 years. If the statute of limitation is five years, the judgment will continue to be listed for seven years.
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