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The Effect of a Judgment on Your Credit File

On Behalf of | Mar 11, 2014 | Consumer Protection

While time has passed since our ailing economy, many consumers
continue to suffer the effects.  Loss of jobs and unpaid bills
allowed collection agencies to shine and while things seem to be on
the up-swing, your unpaid debt will follow you for years to
come.  When collectors are making no headway from the constant
phone calls and collection letters, many take
legal action
and file suit to obtain a judgment against you in
hopes of getting paid.

Once a collector has a judgment against you, there are several
options the collector may choose from in an effort to receive
payment.  The collector may file a lien against your property
or garnish
your wages
.  Some collectors will even seize the assets in
your savings and checking accounts.  When a collector obtains
a judgment against you, it more often than not, reports the
judgment on your credit
which can do some serious damage to your score, causing
you to pay higher interest rates or can cause your existing lenders
to lower your credit limits on your accounts as well.
Furthermore, applying for new credit may result in denials because
of the judgment on your report.  New lenders may be hesitant
to lend you credit with knowledge that you have not paid back your
previous lenders.

A judgment can remain on your credit file for seven years from
the date it was filed against you.  After seven years it
should automatically be removed from your report and if it not
deleted, you need to contact the
credit reporting agency to ensure its removal.  The older
the judgment the less it will affect your report and a paid
judgment will help to improve your score as well.

With the knowledge that a judgment will remain on your
credit file
for seven years, regardless of whether or not it
was paid in full, making an effort to avoid a judgment is in your
best interest and will save your credit score from seven years of
damage.  First, try contacting the original creditor directly
to work out a payment plan.  If the creditor is unwilling to
discuss payment with you try contacting the collector to make
payment prior to going to court.  If you are unsuccessful in
making contact with the collector, do NOT miss your court
date.  Make sure to appear at the proper day and time.
At your hearing, reach out to the attorney and make an effort to
pay then and there.  Most attorneys are willing to negotiate a
payment plan without filing a judgment against you.  When you
appear before the judge, you can advise him or her that a
settlement has been reached and the case can be dropped.

Avoiding a judgment can spare you years of frustration.
For more information regarding your debt
collection issues
contact SmithMarco P.C. for a free case review.