There are several options to explore if you want to avoid a judgement when you are late on repaying a debt. Some of these actions may be performed before a judgement is rendered, while others require legal recourse after a judgement has been granted.
What is a judgement?
A judgement is a legal acknowledgement of a debt and an enforcement of repayment of the debt. When a debtor falls behind in repayment of a debt, and the creditor seeks to force repayment, the creditor will file for a judgement in a local civil court.
Assets can then be seized to repay the debt, including having a garnishment placed on the debtor's wages. The court will contact the debtor's employer and have payments taken directly from the debtor's pay until the debt is paid in full.
How can a judgement be avoided?
Talk to the creditor
The first option is to be proactive and contact the creditor when you begin to experience financial problems. Many creditors will allow you to skip payments and transfer them to the end of your loan repayment.
You may also be offered a plan to repay missed payments in installments by adding an additional sum to your current payments. After the missed payments are repaid, the current payments return to their regular amount.
Some creditors will also offer to lower the interest rate on your loan. Creditors want you to be able to repay your debt without the threat of legal action, but you must stay in communication with them, even if you are nervous or embarrassed.
Consult with a consumer credit counseling center
Consumer counseling centers are non-profit facilities which offer financial help and planning to debtors. They are funded by creditors and charge only small fees for specific services.
Among their services are debt consolidation and repayment plans. They will consult with a debtor to determine their ability to repay their outstanding debts according to their income and other living expenses.
They will then contact the creditors and negotiate with them to accept lower monthly payments and/or reduced interest rates. The debtor will then make one monthly payment to the counseling center that is then distributed among the various creditors.
These centers only handle unsecured debt, such as credit cards and personal loans, but can help a creditor avoid judgements on these types of debt.
What can you do if a judgement has already been granted?
If a judgement has been rendered against you in civil court, you have the option of filing for bankruptcy protection in federal bankruptcy court. This will result in an automatic "stay," or cessation of any legal action to collect the debt, even if your wages are already being garnished.
While filing for bankruptcy protection can cause your credit rating to suffer dramatically, it is already likely to be severely tarnished after a judgement. However, bankruptcies stay on your credit report for a few years longer. For more information, contact an attorney like Stuart J Sinsheimer.
Hello, I'm Christina Miller. Have you ever been fascinated with why the law works the way it does? Ever since I was in junior high, I had an intense interest in anything related to our legal system, whether it be a crime drama on television, a judge show or a legal case covered on the news. I followed it all. As time progressed, I began learning about how the actual legal system worked and not just the fictionalized version of our legal system. This has lead me to start writing my own blog posts about law that I hope will help others.