A credit card company you owe a balance to can seek a court judgment against you if you do not voluntarily pay off your debt. Or the credit card company can sell the account to a debt collector that also has the right to sue you and seek a judgment. A court judgment allows the creditor to recover the debt, typically by garnishing your bank accounts or wages. Under certain circumstances, you can stop a court judgment from occurring -- even if the creditor's lawsuit is already under way.
Prevention
If a credit card company or debt collector threatens to seek a judgment against you in court, you can attempt to prevent a lawsuit by either paying off the debt or working out a settlement with the creditor through which you pay less than the total amount you owe and the creditor forgives the remaining balance. If you cannot afford to pay the debt or settlement amount in full, some creditors will agree to a payment plan that allows you to pay your delinquent credit card debt in installments.
Fighting the Lawsuit
Collection agencies sue debtors more frequently than credit card companies. Debt collectors, however, do not always have the documentation necessary to prove that the debtor actually owes the debt. If you contest your liability for the debt in court, the burden of proof lies with the plaintiff. Thus, if a creditor cannot prove that you owe the credit card debt, it may drop the lawsuit rather than pursue a case it may not win -- preventing a court judgment from occurring.
Prevent Docketing
A judgment becomes official when the plaintiff "dockets" the judgment. The plaintiff does this by filing the certified judgment with the court. The court then enters the judgment into the public record. Once the judgment becomes a matter of public record, anyone can research and view the details of your case and the judgment appears on your credit report.
Although court districts operate by different sets of rules, if you agree to pay off your credit card debt in full immediately following the judgment, your creditor may also agree not to file its certified judgment with the court. In this case, the judgment occurred but will not enter the public record or appear on your credit file.
Considerations
Once the court enters a judgment against you, the creditor is unlikely to accept a settlement offer because it has legal means, such as garnishment and liens, to force you to pay off the debt in full. If, however, the creditor cannot force you to pay the credit card debt because your income is exempt from garnishment and you own no property on which the creditor could place a lien, it may agree to a settlement after obtaining a judgment.
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