Credit Card Judgments and You

Credit Card Judgments and You

To begin with, a credit card judgment is a court order acknowledging that the consumer owes a debt and which allows the creditor the right to seize assets to repayment the debt owed. This normally comes about when a credit card cardholder falls behind on their monthly minimum credit card payments and has virtually ignored repeated requests from the credit card provider to bring the account current.

If you would like to contain the situation before it gets out of control, call the credit card provider and explain your situation. Most credit card providers are willing to work with their cardholders. It would be best to try to come to a payment arrangement in order to bring your account current.

If a credit card provider feels it will get nowhere with you regarding your credit card debt, it may sell your debt to a collection agency. If so, you will then have to negotiate with the collection agency as the credit card provider has removed itself from the equation. Most collection agencies do not want to file a law suit against you as it is time-consuming and costly. They would much rather work with you to settle the debt, either through a lump sum payment or by arranging monthly payments.

If your debt does come before a judge for a credit card judgment, you have the right to appear before the judge and plead your case. If the debt is not yours or if the seizing of the assets would mean serious difficulties for you, the judge may take this into consideration. However, this is viewed on a case-by-case basis.

The judge may determine exactly which assets may be used to recover the credit card debt. Other options which the judge may use are garnishing your wages, taking money directly from your bank account, and placing a lien on your real property.

As you can imagine, a credit card judgment will adversely affect your credit score. This judgment will likely mean that you will be denied for most credit products for which you apply and, if not, you will be offered exorbitant annual percentage rates (APRs) and monthly and annual fees. Also, this credit card judgment can remain on your credit report for up to seven years.

It is important to keep in mind that a credit card judgment will likely affect future employment opportunities or advancement related to your current position. Additionally, a credit card judgment can make finding reasonable rates for home and car insurance very difficult.

It is best to pay the credit card debt off as quickly as possible once the judgment has been issued. Once you have paid this debt off, you should try to contact the credit reporting agencies to attempt to have the debt removed in its entirety or to request this entry be revised to a “paid” status, at the very least.

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