What Is a Judgement for Credit Cards?
Credit cards are unsecured loans, meaning that a bank lets you use its money without any collateral. You personally or electronically sign a repayment contract, and the bank has certain rights if you default. A judgment is a tool to force payment if you refuse to pay the bill voluntarily.
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Definition
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A judgment results from a lawsuit by a bank or collection agency to collect on a defaulted credit card account. Most credit card contracts include a provision allowing a lawsuit if you stop paying the bill. The card issuer can sue you itself or sell your account to a debt collection company, which may opt to take you to court.
Time Frame
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Banks rarely file for a judgment immediately after you stop paying on your account. First they call and send letters attempting to get some money from you. The bank may even offer a settlement for less than you owe if you make a lump sum payment, or the bank may agree to waive late payment penalties if you catch up the account within a certain time. MSN Money writer Liz Pulliam Weston explains that banks do not charge off accounts and sell them to outside collectors for about six months. Your card issuer may opt to sue you instead of selling the debt if it believes you have the ability to pay.
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Process
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You receive a summons when a bank or collection agency sues you for a credit card debt. Creditors will often negotiate a settlement with you and drop the case if you reach an agreement. Otherwise, you must go to court or the judge will enter a default judgment against you. You present your side of the case, the creditor explains why it should prevail, and the judge makes a decision. The court usually gives you 30 days to pay if you lose, and the creditor can take further action if you ignore the judgment.
Result
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A creditor tries to force you to pay when it gets a court judgment for a credit card bill. This may include attaching property or garnishing your wages, depending on your state's specific laws. The judgment also goes on your Experian, Equifax and TransUnion credit reports, where it is visible to lenders for seven years from the original delinquency date. You may be sued even if you are unemployed and have no assets, because the creditor can enforce the judgment later if you get a job. Judgments are usually enforceable for 10 years.
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