Credit card debt can escalate quickly, especially if you stop making payments. In some cases, what starts as one or two missed payments can end in a legal judgment. If you’re facing or have already received a credit card judgment, it’s essential to understand how long it lasts and what your options are.
This guide walks through the timeline of a credit card judgment, how it impacts your credit, and what you can do to resolve or challenge it.
What Is a Credit Card Judgment and How Does It Happen?
A credit card judgment is a court order in which a judge allows a creditor to use certain tools to collect your unpaid debt. This may include wage or bank account garnishment, liens on your assets, and more.
How a Creditor Files a Lawsuit Against You
When you default on a credit card debt, the credit card company or a debt collector may choose to file a lawsuit against you to recover the amount of money you owe. This typically happens after several months of missed payments and failed collection attempts.
You’ll receive a court summons and complaint, notifying you of the lawsuit and giving you a chance to respond by a certain date.
What Happens During Court Proceedings
If you respond to the debt collection lawsuit, the case will typically move forward through the court system to trial. You and the creditor will present evidence, and a judge will determine whether you owe the debt.
If the court rules in favor of the creditor, it will issue a judgment stating the money you owe and the methods the creditor can use to collect.
Default Judgments – What If You Don’t Respond?
If you ignore the summons or fail to appear in court, the creditor can win the case by default — this is called a default judgment. Once entered, it gives the creditor legal authority to pursue collection through wage garnishment, bank levies, or personal property and real estate liens, depending on your state’s laws.
How Long Does a Credit Card Judgment Last?
The duration of a credit card judgment will depend on several factors. Here’s what to keep in mind.
Statute of Limitations and Legal Deadlines
The time limit of a credit card judgment varies by state. In New York, for example, a judgment is enforceable for 20 years. Many states allow judgments to remain active for 10 to 20 years, with the option to renew them before expiration.
Interest Accumulation Over Time
Many states allow judgment creditors to add interest, along with other fees, to a judgment after it’s been entered by the court. These costs can significantly increase the total amount owed over time. The interest rate may be set by state law or specified in the court order.
Factors That Affect the Lifespan of a Judgment
A few different factors can influence how long a judgment remains active:
- State law: Each state has its own statute of limitations and renewal rules.
- Renewals: Creditors can often renew judgments, extending their enforceability for a longer time period.
- Collection efforts: The creditor’s diligence in pursuing the judgment can also affect whether it remains a factor in your financial life.
- Your actions: If you choose to pay off the debt, it’ll remove the court judgment.
How a Judgment Affects Your Credit
Judgments no longer show up on your credit reports and, therefore, don’t impact your credit score directly. However, the missed payments, default and collection account reporting leading up to your judgment will have already impacted your score.
However, lenders may still discover judgments through public record searches or third-party databases, and they may decline your application for credit or charge you higher interest rates and fees based on the information they find. So, even though money judgments aren’t listed on credit reports, the consequences can still be felt.
What’s more, wage garnishments, judgment liens, and frozen bank accounts can strain your financial resources and make it harder to qualify for new credit or loans.
What You Can Do About a Credit Card Judgment
If a judge has entered into a judgment against you, there are a few ways you can respond.
Pay the Judgment in Full
One of the most straightforward ways to resolve a judgment is to pay it in full. Once satisfied, the creditor should file a satisfaction of judgment with the court, which ends their ability to enforce it.
Reach a Settlement Agreement with the Creditor
It’s best to try for a settlement before it gets to this point and avoid a judgment altogether, especially because you now have less leverage. However, you may still have time to negotiate a settlement for less than the full amount, either as a lump-sum payment or a payment plan.
If the creditor agrees, get the terms in writing and request that they file the appropriate documentation to reflect the resolved judgment.
How Bankruptcy Affects Credit Card Judgments
Filing for bankruptcy can discharge certain types of judgments, including those from credit card debt. However, this depends on the type of bankruptcy you file and the nature of the judgment. Before you consider filing for bankruptcy, it’s critical that you speak with a bankruptcy attorney to evaluate your options.
Legal Options to Challenge or Remove a Judgment
If you believe that a judgment was entered against you unfairly, there are some potential remedies available to you.
File an Appeal Against the Court’s Decision
If you believe the judgment was issued in error or based on incorrect information, you may be able to appeal the decision.
Appeals must be filed within a specific time frame and follow strict procedural rules, so it’s best to work with an experienced debt lawyer who can provide legal advice and guide you through the process.
Vacating a Judgment – When It’s Possible
If you were not properly notified of the lawsuit, or if you have a valid defense, you may take legal action and file a motion to vacate the judgment. If successful, this can effectively undo the court’s decision and give you a chance to defend yourself.
Out-of-Court Settlements and Their Legal Effect
Even after a judgment is entered, you can negotiate a settlement with the creditor. If you reach an agreement, make sure it’s documented and that the creditor files a satisfaction of judgment with the court.
Conclusion
A credit card judgment can have long-term consequences, but it doesn’t have to define your financial future. By understanding how judgments work, how long they last, and what steps you can take to address them, you can regain control of your financial health. Whether through payment, settlement, or legal challenge, taking action is the key to moving forward.
At Tayne Law Group, we have decades of experience assisting clients with credit card debt, including negotiating with creditors and guiding you through the legal process. We take a personalized approach to help protect your personal interests. For a free, confidential phone consultation with no obligation, call us at (866) 890-7337 or complete our brief contact form. Your privacy matters to us—your information is never sold or shared.
