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What is a Debt Collection Judgment?

By Laura Gutmann on December 1, 2010

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If you have a long-standing debt, such as failure to pay a credit card bill, eventually you may find yourself being threatened with legal action leading towards your debt going into judgment. This is a last resort option that gives companies the right to sue you for the amount that you owe, once the debt has gone to collection and they have made multiple attempts to collect it in other ways. The company’s attorney will send you a letter giving you a certain amount of time to repay the debt before you are summoned to court. Normally you will have about 30 days to respond.

If the process continues, a court date will be assigned, providing you with an opportunity to defend yourself before a judge delivers a ruling that specifies the steps that will be taken to ensure the debt is repaid. If you do not follow through, the company can go back to court and ask to take more drastic steps, such as seizing your property or other assets.

How can I avoid going to judgment?

Many times, companies do not want to go through the expense and hassle of taking you to court. They may threaten to do so in order to get you to pay up on your own. It is very important not to ignore communication from the company that you owe money to – you need to respond to them and suggest a repayment plan or discuss your options. Most companies will be satisfied if you can, “determine what monthly amount you can afford and send it to the agency, certified with a return receipt, with a written statement that you will pay that amount each month until the balance is paid.”¹ You can always seek your own legal counsel if the situation seems to be getting out of hand or you are not able to come to an agreement.

The important thing is to demonstrate that you are actively seeking ways to resolve the issue so they feel that a court order is unnecessary. Going to court may put your other assets at risk and make it extremely difficult for you to regain good financial standing in the future.

Source:
¹ http://www.bankrate.com/brm/news/debt/20031107a1.asp

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