How to Avoid a Judgment Creditor

Having a creditor request a judgment on your credit report for past-due bills can hurt your credit rating. With a damaged rating, it's harder to qualify for financing from credit cards to mortgage loans. Situations like job loss or illness can trigger delinquencies. But even if you've missed a few payments and your creditors threaten lawsuits and judgments, you can take steps to protect your credit rating.

Instructions

1

Get the account out of default. Contact your creditors to see what steps you can take to get the account back on track. This might involve paying the past-due balance plus late fees and additional interest.

2

Request new terms. To avoid a lawsuit, creditors are often open to negotiations. Let them know the circumstances around your money problems and then request help. Creditors may lower your monthly payment or let you skip payments for a few months. Know how much you can afford to spend on the debt each month before negotiating with your creditors.

3

Ask the creditor to take a settlement to satisfy the balance owed. Settling debts for less than you owe can look bad on your credit report, but this move can avert a lawsuit with your creditors and a potential judgment. If you're behind on payments and don't foresee the ability to pay off the entire balance, discuss this with your creditors and ask for a debt settlement. Offer a particular amount to settle your debt. For example, if you owe $3,000, offer to settle the debt for $1,500.

4

Dispute the debt before the case goes to court. If you don't owe a debt, call or write your creditor to dispute the charge. Ask it to supply proof of the debt within 30 days or stop collection attempts; or if you already satisfied or paid a debt, go through your financial records and submit a copy of the check that cleared your bank account.