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All About Judgment & 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?

I am 28 years old. 5 years ago while in college I had a judgment against me filed by a credit card company. I never seen the judgment or the papers saying I had a case and where the case was filed because I was currently living at school where my permanent residence was. What can I do to settle the original amount with out paying all these extra fees. Again I was never given a copy of the proceedings.

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Bill's Answer
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Updated: Oct 21, 2014

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Highlights

  • One option is to file a motion to vacate the judgment.
  • Another option is to work out a lump-sum settlement with collection agent.
  • Consult with an attorney to discuss your options.

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

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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 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 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 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 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.

Judgment & Credit Card Debt 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.

Judgment & Credit Card Debt 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 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 his helps you make the right decision for your particular situation. If you would like more information, visit the Bills.com Debt Help Information page.

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

Best,

Bill

Bills.com

181 Comments

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  • JS
    Apr, 2014
    Julie
    Hi Bill, I posted here 3 years ago about a judgment in VA and I'm a SC resident. Since then I hired another attorney who specializes in debt collection. She was unable to settle the debt. They refused to negotiate at all. Recently they called my cell phone and sent me a letter. If they knew I had legal representation, shouldn't they contact my lawyer? Lastly, the original debt, including attorney fees, was around $4500. Now the debt is over $9000 due to the 18% interest awarded in the default judgment. Since they won't settle, can I send them the original debt plus 9% interest, the current allowable interest rate for settlement debt in VA, and write on the cashier's check, that the amount being paid is for the original judgment plus 9% interest? That way if they try to domesticate the judgment in SC, they will only be suing me for interest. I'm concerned if I send them anything, they will apply it only to interest and still continue to go after me for more money. Please advise. Thanks!
    0 Votes

  • EB
    Sep, 2012
    Erik
    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.
    0 Votes

    • BA
      Sep, 2012
      Bill
      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.
      0 Votes

  • MP
    Aug, 2012
    m
    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?
    0 Votes

    • BA
      Aug, 2012
      Bill
      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.
      0 Votes

  • AL
    Apr, 2012
    Alice
    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?
    0 Votes

    • BA
      Apr, 2012
      Bill
      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.
      0 Votes

  • EL
    Sep, 2011
    Elizabeth
    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!
    0 Votes

    • BA
      Sep, 2011
      Bill
      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.
      1 Votes