What Is a Judgment on Credit Report?

A judgment is a legally binding decision made by a judge in a civil court case. When a creditor wins a lawsuit against an account holder, a judgment is recorded that legally acknowledges that the account holder owes a debt and is obligated to repay.


Reasons for Judgements

Judgments can happen for a variety of reasons, including back child support, medical bills, credit card default, car repossession, and non-payment of mortgage or rent. The decision to sue is made by the creditor. Situations with low unpaid balances are usually written off and sent to collections instead of entering court proceedings.

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Effect of Judgment on Credit

Judgments are a matter of public record and can be viewed by any potential employer or creditor. Judgments are reported on credit files for at least seven years and will remain on public record until satisfied or vacated. In addition, judgments have a strong negative effect on credit score.


Default Judgments

When creditors make the decision to sue for losses, a court summons is served to the account holder. If the account holder does not appear in court on the specified date, the court decision is automatically made in the creditor's favor as a default judgment.

Enforcement of Judgments

Since a judgment is a legal decision, failure to comply with the court order could result in further court action. Some judgments will specify a payment plan to repay the creditor the account balance due plus any fees incurred during the legal process. Depending on individual circumstances, repayment measures could include wage garnishment, bank account freezes, forfeiture of income tax refunds, or seizure of property.


Avoiding a Judgment

The best way to avoid judgments is to pay all bills on time every time. If that is not possible, contact creditors and debt collectors for options. They may be able to work with your situation and offer installment payment plans. Anything is better than allowing the situation to escalate to a court of law.

What To Do If Served

If you are served a summons, do not ignore it. Contact the local court to determine if you need to file paperwork in advance to the court date. Organize any information you have pertaining to this debt, and prepare to present your side of the argument in court. Representing yourself will not be difficult if you are prepared, but consulting an attorney to assist in your defense is an option.