As you can imagine, when your debt is sent to collections, your credit score will be damaged. If from there your creditor seeks a judgment for payment, your credit score will plummet even further.
Your creditor is sending a clear signal that it is through playing games if you are served with a Notice to Appear in court for a judgment proceeding. You will have 30 days from being served to object to the filing. You can have the case dismissed if you can prove that the debt is invalid.
A creditor may or may not be serious if it threatens to file a law suit. However, going to court should be a very, very last resort in your mind.
An “unpaid” judgment will be shown on your credit report for 10-12 years. At the end of this 10-12 year period, if the judgment remains unpaid, it can be renewed. A paid judgment can be shown on your credit report for up to 7 years from the date paid.
Assuming you owe the debt, the debt is still within the statute of limitations (check your state’s statute of limitations laws), and you would prefer to negotiate the outcome instead of going to court, you should make an attempt to contact your creditor. Prior to doing this, you should check your state’s statute of limitations laws because, if the debt is beyond the law, making an offer to pay could begin the clock ticking again and eliminate any statute of limitations claim you may have had.
If the court issues an official court order for payment of the debt, your credit score will suffer drastically. This negative mark will not show up on your credit report if you contact your creditor and negotiate a settlement prior to the entry of judgment.
Offering to negotiate a settlement is the best solution for all parties. Typically, creditors do not want to go to court and will accept a portion of the amount owed just to bring the matter to a close. If you do not have a lump sum to offer as payment, you can always attempt to negotiate a payment plan. If your creditor is not “in the mood” to consider any offers, you might think about calling the lawyer handling the case for your creditor.
A “legally void” entry will be shown on your credit history if a judgment is dismissed; this type of entry is much less harmful than a “paid judgment.” Your credit report can show a “paid judgment” entry for seven years.
It would be best to negotiate a settlement which includes a complete deletion of all negative information from your credit report related to the transaction. If you and your creditor are able to agree, be sure to obtain a written agreement with both of your signatures. You should always remember that, once the court becomes involved, negotiating opportunites become slim to none.
It would be smart to consider seeking out the advice of a seasoned consumer credit attorney. The typical consumer credit attorney has handled hundreds, if not thousands, of these types of cases and can benefit you with his experience and knowledge.
I Freed Myself from the Midland Credit Collection Agency. See How I Did it at www.MidlandCreditDebt.com
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