Credit Card Debt Judgments

If you default on a credit card account, the credit card company can try to get a money judgment against you by filing a lawsuit. If the credit card company gets a judgment, it can use all sorts of collection methods against you to get paid.

A credit card company can get a judgment against you in several ways after it has filed a lawsuit.

What Is a Judgment?

A "judgment" is an order a court of law enters indicating the court's findings. A judgment gives the creditor the right to use additional collection methods to collect the debt owed.

For example, if the credit card company proves to the court that you owe $5,000, a court may enter a judgment saying that you owe $5,000 (plus costs and interest). The creditor may then use the additional collection methods to get paid.

How Does a Credit Card Company Obtain a Judgment?

To obtain a judgment, the credit card company must first file a lawsuit against you in a civil court. The creditor's attorney will file a document called a "complaint" and deliver the complaint to you. This delivery is called "service," ensuring you get notice of the lawsuit.

Then, the company can get a judgment in several different ways.

Winning at Trial

If the creditor files a lawsuit against you, the case may eventually proceed to trial. At trial, the burden is on the credit card company to prove that you owe money.

Suppose it has provided enough evidence (typically in the form of a signed credit agreement and accounting or billing statements). In that case, the court will issue a judgment in its favor unless you have proven that you don't owe the money or have another defense.

Many steps take place in a lawsuit between the complaint and the trial.

Winning a Motion for Summary Judgment

"Summary judgment" is a way the creditor can obtain a judgment against you without going to trial. The creditor files a motion for summary judgment and tries to convince the judge that none of the facts of the case are in dispute—for example, that you signed a legal loan agreement, made no payments, and have no defense as to why you're not paying.

The creditor also must convince the judge that it is entitled to judgment as a matter of law. If the judge agrees with the creditor, the judge can enter a judgment against you without any trial. The creditor should not win if there are any material (important) facts in dispute (for example, if you claim you didn't sign the agreement).

Getting a Default Judgment

If you don't file an answer to the complaint within the response period, you lose the right to challenge the creditor's lawsuit. If the creditor presents enough evidence to the court showing that you owe the debt, the court will grant a default judgment.

Getting a Judgment as Part of a Settlement

Before the court issues a judgment, you may enter into a settlement agreement with the creditor. In a settlement agreement, you and the creditor agree to certain terms. Accepting a settlement is sometimes less risky for a creditor than suing. Filing a lawsuit costs money, and the creditor might know it has little chance of collecting the full balance through regular methods, like garnishment, after getting a judgment.

So, you might agree to pay the creditor a certain sum of money, and the creditor might agree to dismiss the lawsuit. But sometimes, the creditor negotiates for a judgment order as part of the settlement. Then you agree that a judgment will be entered against you for the settled amount. Creditors like these judgments (sometimes called "consent judgments") because if you don't pay up per the agreement, they can use the additional collection methods available for judgments.

How Does a Credit Card Company Collect Once It Has a Judgment?

Once a credit card company has a judgment against you, several methods are available for collecting on the judgment. These methods aren't available to the credit card company without a judgment.

Under state law, the creditor may attempt to collect by the following methods:

• garnishing or attaching your wages
• attaching your bank account
• executing against personal property, or
• filing a lien against your real estate.

Talk to an Attorney

If you need help responding to a lawsuit for nonpayment of a credit card debt, consider talking to a lawyer.