Credit Card Debt Judgments

If you default on a credit card account, the credit card company can try to get a money judgment (a credit card judgment) against you by filing a lawsuit. The company can get the judgment against you in several different ways, such as through a default judgment or summary judgment, after it has filed a lawsuit.

If the company obtains a credit card judgment, it can use all sorts of collection methods against you to get paid.

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, such as when:

• you don't respond to the suit
• the creditor gets a summary judgment
• the creditor prevails at trial, or
• the creditor gets a judgment as part of a settlement.

What Happens If You Don't Respond to a Lawsuit?

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.

In most cases, you should respond to the suit, either on your own (called pro se) or with the help of an attorney. Responding gives you the opportunity to defend yourself, whether by disputing the debt, questioning the validity of the debt, or the creditor's right to enforce it.

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 shouldn't win if there are any material (important) facts in dispute (for example, if you claim you didn't sign the agreement) or you have another defense, such as the statute of limitations has expired.

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.

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.

However, sometimes, the creditor negotiates for a judgment order as part of the settlement, which means 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.

Statute of Limitations on Credit Card Debt and Judgments

The statute of limitations for credit card debt is the legal time limit in which a creditor or debt collector can sue you for nonpayment. Each state sets the statute of limitations for credit card debt, which usually ranges from three to six years, but it can be longer in some states. The statute usually starts to run from the date you made your last payment or when you missed a payment (it depends on state law).

Be aware that making a payment or even acknowledging the debt can restart the clock for the statute of limitations period and extend the time period during which you may be sued. Also, you should know that even though the statute of limitations restricts the time a lawsuit can be filed, it doesn't erase your debt. Creditors may still try to collect and the debt may still negatively affect your credit.

What Happens After 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.

FAQs About Credit Card Judgments

Find out the answers to some common credit card judgment questions.

What happens if you ignore a credit card lawsuit?

If you ignore the suit and don't respond by the deadline, the court will probably enter a default judgment, even if the creditor's case wasn't that strong. Not responding limits your options. It is usually very difficult to get a judgment changed or set aside once the case is over. You also have a better chance of working out a settlement if the creditor hasn't already received a judgment against you.

Can a judgment be reversed or appealed?

Maybe. If you didn't respond to the lawsuit for a good reason, you can ask the court to set aside or vacate the judgment. But you'll need a very good reason, such as you weren't properly notified about the suit. If you lost the case even though you responded to the suit, you have the right to appeal. The timeframe to appeal is usually quite limited. If you think you want to appeal a judgment, consider talking to a lawyer to find out the process to appeal and learn about your chances of success.

How long does a judgment stay on your credit?

Judgments don't appear on credit reports. However, most unpaid debts, including credit card debts, can remain in your credit reports for up to seven years.

How much of my wages can be garnished?

Federal and state laws limit how much of your wages can be garnished. Generally, federal law limits the amount to to 25% of your disposable earnings for that week (what's left after mandatory deductions) or the amount by which your disposable earnings for that week exceed 30 times the federal minimum hourly wage, whichever is less. (15 U.S.C. § 1673 (2025).) State laws might protect more of your income.

Can I settle after a judgment is issued?

You may settle a credit card debt after a court grants a judgment against you. However, creditors are less likely to negotiate at this point because they have other ways to collect from you, such as by garnishing your wages or levying a bank account. Still, it doesn't hurt to ask if a judgment creditor will consider a settlement.

Talk to an Attorney If You're Facing a Credit Card Debt Judgment

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