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SEP 21, 2012

All about judgment and credit card debt

5 years ago while in college I had a judgment filed by a credit card company, What can I do to settle the original amount?

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Bill's Answer: Bills.com Resident Expert

Quickly learn about the consequences of credit card debt judgments.

Unfortunately, the situation you describe is far too common. Aggressive collection attorneys and process servers are frequently careless about properly serving defendants, leading to default judgments against people who do not even know they were sued. I will explain more in just a moment.

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Civil Procedure and You

Many are unaware of these judgments until their wages are garnished or their bank accounts levied. The first step to fighting the judgment against you is gathering evidence that you were not served with the summons as the creditor claims. Contact the court clerk for the county in which the lawsuit was filed; ask him or her how to obtain a copy of the "Return of Service" filed by the creditor. You will probably need to go to the court house to retrieve a copy of the document.

You will then want to find some evidence that you were not living at the address shown on the Return of Service, and that you could not reasonably be expected to receive a summons served at that address (for example, show that your family did not live at the address).

Since you were at school at the time, you could probably obtain documentation from the school showing your address at school and your permanent address. If you are able to show that the summons was not served at one of your listed addresses, nor at an address where you could be reasonable expected to receive it, you may be able to file a "motion to set aside default judgment."

However, given the length of time that has passed since the judgment was entered, you will probably be fighting an uphill battle.

If you plan to pursue the course of action described above, I recommend that you consult with an attorney in your area who can advise you on the strengths of your case and your state’s Code of Civil Procedure.

"Civil procedure" is the area of law that concerns the rules parties must follow when litigating a lawsuit. The failure to follow state or federal civil procedure rules can cause a plaintiff (the party bringing the complaint) or the defendant (the party defending the complaint) to lose the lawsuit regardless of the merits of the case. In colloquial terms, civil procedure is the act of dotting Is and crossing Ts.

Option 1

If you are able to have the judgment set aside, it will not free you from your obligation to the creditor, however the amount that you owe will be up to the court.

The creditor may be able to ask for the principal plus five years interest; however, if you can show that they committed a fraud on the court, the court may bar them from charging interest for the past five years. Again, these are issues that you should discuss with a qualified attorney.

Option 2

Another option would be to contact the creditor’s attorney and try to settle the judgment. In my opinion, this would probably be the easiest way to resolve this debt. Though I do not know the balance of the judgment in question, if you can come to the table with cash in hand the creditor may be willing to settle this debt for much less than the actual balance, especially given the age of the judgment.

You should probably plan on paying anywhere from 50% to 70% of the balance, though the creditor may be willing to take less, or may ask for more. Usually, if a creditor is going to accept a settlement, it wants payment in a short time frame, so if you make an offer, make sure you have the cash available. Also, make sure that you get a letter from the creditor or the law firm outlining the terms of the agreement before you make any payment.

If you want a third party debt help firm to advise and represent you, go to the Bills.com debt relief savings center and get no-cost quotes from pre-screened service providers.

I hope that his helps you make the right decision for your particular situation. If you would like more information, please visit the Bills.com Debt Help Information page.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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Comments (179)


Erik B.
Spokane, WA  |  September 19, 2012
Hi. I got served for medical debt. I asked for and was provided validation of the debt. I now have court date. Can I still settle before going to court? Thanks or your time and assistance.
Bills.com
September 20, 2012
Courts look favorably on out-of-court settlement as a way to resolve a dispute between parties. If both sides are reasonable in their negotiations, an out-of-court settlement often results in a better solution than a court's decision. You have nothing to lose by negotiating.
M P.
Durham, NC  |  August 20, 2012
After applying for a mortgage, I found out that I had a judgment against a college credit card. Judgment is from Jan 08. I called about the debt, principle of 4900, total with interest 18K. Is it unwise to call and offer a cash settlement or seek legal council first?
Bills.com
August 21, 2012
No choice you make in this matter is free from potential harm. If you do nothing, you won't qualify for the mortgage. If you contact the judgment-holder, it is possible that they will not accept a settlement offer and pursue collections through a wage garnishment or bank levy. Contacting them may wake a sleeping dog.

Make sure to check your state's laws for how much interest can accrue post-judgment. Each state sets a limit on the interest rate a judgment-holder can charge. It seems to me that your debt should not have nearly quadrupled in just four years time.
Alice L.
Carson City, NV  |  April 26, 2012
While trying to get qualified for a home loan, I found out that my husband had a court judgment against him filed in Nevada. The date on the credit report says it was decided in 2008. He hasn't been contacted by the creditor in at least three years, and I'm wondering if we should even try to contact them. He is not even sure what it was for, although it probably was for student loans. The statute of limitations for a judgment in Nevada is 10 years, and the last correspondence he received about it was in 2005. Is it worth it to try to pay it or just let it ride and hope it eventually goes away. His wages have never been garnished, and we've put the home search on hold for a couple years. Also, I know the creditor can access bank accounts, but can they access bank security boxes? And we can't just put the assets in my name because Nevada is a community property state. I've thought about consulting an attorney. Thoughts?
Bills.com
April 30, 2012
If you contact your husband's judgment-creditor, there is a risk that collections could accelerate. If you can "let it ride" and still qualify for the mortgage, that seems best. If you can't qualify for the mortgage, while the judgment is not satisfied, then you have to pay or settle the debt or postpone qualifying for the mortgage.

Creditors may not be aware of safety deposit boxes. If you have to make a declaration of all your property, you may have to include information about the contents of the safety deposit box.

If you decide that you need to contact the creditor, I think that consulting with an attorney about how best to structure your assets is a great idea, especially given the fact that you're in a community property state.
Elizabeth L.
Rochester, PA  |  September 14, 2011
Hi. My husband just received a letter in the mail yesterday about a judgement that was issued by Discover for almost $8,000. This is the first time we have heard about this debt in at least 4 years (since we have been together). He said that the credit limit on his card was about $4,000.00. There was no letters or anything before that. My husband is a police officer and for the past few years, we have been trying to fix his credit by paying off credit cards as we got our tax refunds and also made monthly payments to creditors for a settlement. But in June of this year, he was injured on the job and has been out of work since and on worker's compensation. We get about half of his pay every two weeks because his court time and other special details are not included in his hourly 40 hour work week pay. I am the one that has to handle this matter and I don't know who to talk to or what to do. With his pay cut, we are having a tough enough time paying bills let alone trying to come up with the money for a lawyer. Also, If they do garnish his wages, do my wages get included in his income? Will they take all of his money and leave my money to take care of the household bills? since he doesn't make much money, will they take some of my pay to compensate for it? Sorry I have so many questions, I am just clueless in this area. Any suggestions would be greatly appreciated!
Bills.com
September 15, 2011
Garnishment rules vary by state, but the federal maximum for consumer debt is 25% of the judgment-debtor's net wages. In many states, the percentage taken can be reduced or eliminated if the judgment-debtor is the head of a household, or earns less than a certain amount. Consult with a lawyer in your state who has consumer law experience to learn more. Alternatively, contact the Legal Services Corp., which provides low- and no-income people no-cost legal services.
John G.
Lubbock, TX  |  September 14, 2011
I am going to court in Oct. vs Capital One. I intend to show up and contest the debt. If I lose will my assets outside of my county be subject to liens or just the assets (like savings accts.) within my county where the lawsuit was filed?
Bills.com
September 14, 2011
Any non-exempt assets, regardless of their location, are at risk for lien. Any non-exempt financial accounts are at risk for account levy, as well.
Brianna W.
Arlington, VA  |  September 14, 2011
I just received a letter from my employer that they will begin garnishing my wages due to a credit card bill that owe. Is it too late to offer a settlement... I was aware that this would happen, however the if the hearing isn't until January 2012, how are they garnishing already? Who would I call to offer a settlement too? The total amount is $6600, I could offer right now $4000, I have that saved... If I offer a settlement and possibly a payment plan, will that stop the garnishing of wages?
Bills.com
September 14, 2011
By all means, contact the owner of the debt, which may be the law firm that possesses the judgment and filed the garnishment order. The law firm would rather receive a lump-sum settlement than wait for complete payment in a garnishment.
Jennifer H.
Washington Twp, NJ  |  September 08, 2011
I was divorced in April of 2010. In our agreement I deeded the marital home in PA over to my ex, as I was not on the mortgage note, only the deed. Before I had a chance to remove myself from the deed, a foreclosure summons was issued to both me and my ex (June 2010). I had already been living in NJ for 15 months, but they only sent the summons to the PA home where I no longer lived. I received it by hand from my ex a couple weeks later. I could not attend court so a default judgment was issued and now a lien is on my credit report. Is it too late to file a motion to vacate for improper service? Or if the court is aware of all the circumstances is that enough to have them vacate the judgment (ie, I was no longer an interested party in the property even though I was still listed on the deed)? Help I do not want this thing on my credit for 10 years!
Bills.com
September 08, 2011
An excellent question to ask a Pennsylvania lawyer who has experience in family law. The rules to vacate a judgment vary by state, and I am unqualified to say whether your circumstances meet Pennsylvania's requirements.
Shannon G.
Oakland, MO  |  September 01, 2011
I was served a summons to appear in court regarding an outstanding credit card balance. (Capital One) The amount is approx. 1850.00. I ended up calling the law office/creditor to try to come up with some type of payment plan. I was unable to go to court because of the birth of my son. I was given a temporary repayment schedule (3 mos.) and I was told to call back to notify them of my financial situation. The bottom line is I am in this situation because we no longer had steady income coming in. Both my husband and I are back in school, he is working side jobs while I take care of the kids. We have lost our house and are now living with in-laws. We do not have savings and like I said very little income. I just spoke to the law firm and they are not budging on the amount owed. I will not have money to pay this until my huband gets out of school. (March) I don't know what to do.
Bills.com
September 01, 2011
If the judgment is in your name only, then you should check to see if you are even subject to garnishment, should your employer be served notice to garnish your wages? You have to be left with at least $217.50 per week, after state & federal taxes, social security, and mandatory deductions, if any, for state disability or unemployment insurance are taken out of your pay. If you don't earn enough for them to garnish, then you just have to keep funds in the proverbial cookie jar, not in a bank account with your name tied to it, in order to protect them. Don't be pressured into a payment that is greater than what the creditor can extract from you by aggressive collections.
Les C.
Richfield, MN  |  August 30, 2011
Out of the blue, I got a call from a collection agency asking about a past due credit card bill that was 12 years old. I didn't remember the name of the credit card and the address they gave me was in a different state. I don't remember having the credit card. the bill was for $1400 and the current bill with interest was ~1700. How would I check if I have ever had that card?
Bills.com
August 31, 2011
In which state do you live? The debt has likely passed the statute of limitations. Validate the debt. Don't pay a penny. Don't accept responsibility. Make them prove you owe the debt. I don't think you can find out if you ever had an account, it is so long ago. You could try calling the original creditor, but it has likely fallen off of their records.

I also recommend doing a search online for the name of the collection agency, to see if they have a reputation for collecting on expired debt.
Pat N.
Irvine, CA  |  August 28, 2011
Will I be able to get a Satisfaction of Judgment from judgment creditor after I pay off the notice of levy and wage garnishment is complete?
Bills.com
August 29, 2011
You should be able to.
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