Being in debt and missing payments can lead to accounts going into collections and, if not paid or settled, the creditor does have the option of suing you for the amount owed and costs.
If you get a summons for a lawsuit for one of your debts its a good idea to figure out what a civil judgement is. One of the ways you might find out is by having a civil judgement on your credit report.
A civil judgement is a court order that is the decision from a lawsuit. A judgement in a debt collectors’ favor gives them much stronger tools to collect money owed like wage garnishment and filing liens on your property. If you fail to respond to a summons for a debt the creditor will, 95% of the time, win a default judgement against you. Having a civil judgement on your credit report will make it harder to get a new job, find a place to rent, or get new credit among other things.
In this article I’ll discuss some of the basics for you to aware of. If you get a summons for a debt collection whatever you do don’t ignore it. Seek professional legal help. If you don’t have the money to pay a lawyer call one of the non profit credit counseling services. They typically have good resources for legal help.
You are almost guaranteed to have the judgement entered against you if you ignore the lawsuit or don’t respond to it in a timely fashion. The judge will also typically award damages to the debt collector to cover legal fees which could be in the thousands of dollars.
It is in your best interest to contact a lawyer if you receive a summons to court for a debt. No matter what you need to respond to it.
How to Find out if I Have a Civil Judgement Against Me?
If you did not answer the summons to a civil judgement trial and failed to appear in court than don’t be surprised when the consequences of that action become apparent. You might find out due to:
- You will receive a notice of the judgement in the mail.
- Your bank account is frozen and funds are withdrawn to pay the debt. Your bank will notify you prior to paying money but will not tell you the account is frozen.
- Debt Collectors or their attorney calling you demanding payment.
- Wage Garnishment. Usually your employer will get the court order from the creditor(through the bailiff) and your employer will notify you of the garnishment. See my article on wage garnishment for more information(Link Here).
What can be Seized in a Civil Judgement?
Besides wage garnishment and freezing your bank account, creditors can seize and sell(or liquidate) cars, RV’s, boats, homes, investment assets, and many other things. They also can put a levy on future earnings like insurance payment, tax returns, bonuses and commissions.
What if I can’t Pay a Civil Judgement?
The court will not collect the money from you for the creditor but will allow the creditor to use either bank account freezes, property liens, or wage garnishment to collect money from you. You have very little options to dispute the process at this point.
You should get professional legal help to make a plan and figure out what to do if you are in this situation. Your options are to either pay the judgement amount, try and arrange a payment plan with the creditor, or have your wages garnished until the money is paid.
Depending on which state you are in you can have a couple of options for each:
- Wage garnishments can be fought by filing a claim of exemption. This is you saying that the garnishment will cause a hardship in paying your bills and keeping your home and reduce the amount that can be garnished. It will not be approved if you have, for example, an expensive car loan that you could sell to get out of.
- If your creditor does not agree to a payment plan with you than you can typically file an appeal with the court requesting a payment plan. The judge will decide depending on your finances.
How Does a Civil Judgment Affect your Credit Score?
Your credit report will be negatively impacted by a multitude of entries related to a civil judgement:
- Delinquency from a late or missed payment(30 days past due)
- Serious Delinquency from the missed payment at 60 days late.
- Charge off once the account is 180 days old. This depends on what the original creditor does with delinquent accounts. Some keep collections in house, others will charge it off as a loss and than sell the collection account to a debt collector.
- The debt collector will send a record of the collection account to the credit reporting agencies.
- If the debt collector or original creditor wants to they can take you to court over the debt and get a civil judgment against you. This and the paid status will both show up.
- Settled debt will show up vs paid in full impacting your future options for credit.
Overall your credit score will be severely impacted by the process of getting to the point of a judgement against you. Once you pay it off and work on having better credit habits your score will start to improve.
How to Dispute a Civil Judgement on Your Credit Report?
If you have a record on your credit report showing a judgement against you that is incorrect you can dispute the judgement with the credit reports agencies to get it removed. This, of course, will only work if it is an incorrect judgement(wrong person some other incorrect information) If it is a legitimate civil judgement on your credit report than your best option is to try and negotiate a settlement with the creditor.
A great resource for more information is consumerfinance.org which has great explanations on everything debt related as well as sample letters to for responding to these issues.
What Does Civil Judgement Release Mean?
This is a legal document showing that the creditor was paid in full and that you no longer owe any money on that debt. This is issued by the court after proof of payment.
Your credit report will show whether or not your civil judgement has been paid off or not. If it incorrectly shows that you still owe money on it than you should send a certified copy of the release to the credit reporting agencies and the creditor requesting an update.