July 25, 2012

Credit Card Debt Judgments

If you are in default on a credit card account, the credit card company can try to get a credit card debt judgment against you by filing a lawsuit. If the credit card company gets a judgment, it can use all sorts of collection methods against you to get paid.

There several ways a credit card company can get a judgment against you after it has filed a lawsuit. Read on to learn how a credit card company can get a judgment, and what types of collection actions it can take once it gets a credit card judgment.

What Is a Judgment?

A judgment is an order entered by a court of law indicating the court’s findings. A judgment gives the creditor the right to use additional collection methods to collect the debt owed to them. For example, if the credit card company proves to the court that you owe $5,000, a court may enter a judgment saying that you owe $5,000 (plus costs and interest). The creditor may then use the additional collection methods to get paid.

How Does a Credit Card Company Obtain a Judgment?

In order to obtain a judgment, the credit card company must first file a lawsuit against you in a civil court. The creditor’s attorney will file a document called a complaint and deliver the complaint to you. This is called “perfecting service,” and ensures that you get notice of the lawsuit.

Then, there are several ways the company can get a judgment:

Winning at Trial

If the creditor files a lawsuit against you, the case may eventually proceed to trial. At trial, the burden is on the credit card company to prove that you owe money. If it has provided enough evidence to show this (typically in the form of a signed credit agreement and accounting or billing statements), the court will issue a judgment in its favor, unless you have proven to the court that you don’t owe the money. There are many steps in a lawsuit between the complaint and the trial -- to learn more, see Creditor Lawsuits: What to Expect When the Case Is in Court.

Summary judgment is a means by which the creditor can obtain a judgment against you without having to go to trial. The creditor files a motion for summary judgment and tries to convince the judge that none of the facts of the case are in dispute—for example, that you signed a legal loan agreement, made no payments, and have no defense as to why you’re not paying. The creditor also must convince the judge that it is entitled to judgment as a matter of law. If the judge agrees with the creditor, the judge can enter a judgment against you without any trial taking place. The creditor should not win if there are any material (important) facts in dispute (for example, if you claim you didn’t sign the agreement).

Getting a Default Judgment

If you do not file an answer to the complaint within the response period, you lose the right to challenge the creditor's lawsuit. If the creditor presents enough evidence to the court showing that you owe the debt, the court will grant a default judgment.
Getting a Judgment as Part of a Settlement

At any time before the court issues a judgment, you may enter into a settlement agreement with the creditor. In a settlement agreement, you and the creditor agree to certain terms. For example, you agree to pay the creditor a certain sum of money and the creditor agrees to dismiss the lawsuit. Sometimes, the creditor negotiates for a judgment order as part of the settlement. This means that you agree that a judgment will be entered against you for the settled amount. Creditors like these (sometimes called consent judgments) because if you don't pay up per the agreement, they can use the additional collection methods available for judgments.

How Does a Credit Card Company Collect Once It Has a Judgment?

Once a credit card company has a judgment against you, there are several methods by which it can attempt to collect on the judgment. These methods are not available to the credit card company without a judgment. In accordance with state law, the creditor may attempt to collect by the following methods:

garnishing or attaching your wages
attaching your bank account
executing against personal property, or
filing a lien against your real estate.

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