Finding out you have an outstanding judgment against you can feel like a heavy weight on your shoulders. 🥵
It’s even more alarming when a debt collector calls out of the blue, informing you of a judgment from a debt you didn’t even realize was still an issue–just like what someone on Reddit recently experienced.
As tempting as it might be to ignore it, this is not something to take lightly. After all, an outstanding judgment is not just another bill to pay—it’s a legal matter that can significantly impact your credit and financial future.
If you’re here, you’re probably worried about what this means for you and wondering how you can fix it.
The good news is that with the right steps, you can pay off the judgment and start protecting your credit.
This article will walk you through the meaning of outstanding judgment and the process of paying it off, so you can move forward with confidence.
What Does an Outstanding Judgment Mean?
An outstanding judgment is a court order mandating that you pay a debt owed to a creditor. This happens when a creditor, like a credit card company or lender, sues you because you haven’t paid what you owe, and the court sides with them.
Once a judgment is entered against you, it becomes a legal obligation, meaning you are required to pay the amount specified plus extra costs like court fees and interest.
Judgments vs. collections
It’s important to understand that judgments and collections, while related, are not the same.
A collection is when a creditor hands your account over to a debt collection agency. Then, a debt collector starts knocking on your door and politely (or sometimes not so politely 😅) asks you to pay what you owe.
At this point, there’s no legal action involved—just efforts to get you to settle the debt. But even this can already damage your credit score.
If you keep ignoring that knock and fail to pay off your collections, things can get more serious.
The creditor might decide to take you to court, and this is where a judgment comes into play.
A judgment isn’t just another request; it’s backed by a court order, giving the creditor much stronger tools to make you pay, like taking money directly from your paycheck or placing a claim on your property.
How Do Outstanding Judgments Affect You?
Outstanding judgments can seriously affect your finances and overall peace of mind. Here’s how they might impact you:
- Credit impact: While judgments themselves might not appear on your credit report, the debt associated with them can. This can drag down your credit score, making it harder to get loans, credit cards, or even rent an apartment. The negative impact can last for up to seven years​. To help with this, Cushion can transform your regular bill payments into credit-building opportunities, allowing you to gradually improve your credit score.
- Wage garnishment: One of the quickest ways a judgment can affect you is through wage garnishment. This means that a portion of your paycheck is taken out automatically to pay off the debt, leaving you with less money to cover your daily expenses.
- Property liens: If you own property, the creditor can place a lien on it. This means you won’t be able to sell or refinance your home without first paying off the judgment. In some cases, they might even force the sale of your property to recover the debt​.
- Bank account levies: Creditors can also go after your bank accounts, freezing them or withdrawing funds to pay off the judgment. This can be especially stressful, as it can prevent you from accessing your funds when you need them the most.
How to Pay Off Outstanding Judgments
Once the judgment is issued, the collector has ten years to collect the amount you owe. Paying off an outstanding judgment can feel overwhelming, but with the right approach, you can handle it step by step. Here’s how to get started:
1. Assess your financial situation.
Before doing anything else, sit down and really take a look at your financial situation. Figure out exactly how much you owe, including any extra interest that’s piled up. Then, see what resources you have—like savings or income—that can help you tackle the debt.
💡Pro Tip: Create a personal balance sheet to clearly list your assets (like savings and income) and liabilities (such as debts and outstanding bills). This will give you a straightforward view of your financial health and help you plan more effectively.
2. Negotiate a settlement.
Creditors often prefer to get some money rather than none, so they might be willing to settle for less than the full amount. This can be a win-win: you pay less, and they avoid the hassle of further legal action. Just make sure to get the agreement in writing so you’re fully protected.
3. Set up a payment plan.
​​If paying everything at once isn’t possible, consider asking the creditor to set up a payment plan. This way, you can pay off the debt in smaller, more manageable chunks over time. To help you stay on top of these payments while building your credit with daily expenses, you can use an app like Cushion. Again, make sure everything is in writing to avoid any confusion later on.
4. Seek legal help.
If you’re not sure what to do next or if the creditor is being particularly tough, it might be wise to talk to a lawyer. An attorney can help you understand your options, negotiate with the creditor, and even explore ways to challenge the judgment if it wasn’t entered correctly.
5. Pay the judgment in full.
If you can, paying the judgment in full is the simplest way to clear the debt completely. This stops any more interest from building up and prevents further legal action against you. Once you’ve paid, the creditor has to file a “Satisfaction of Judgment” with the court, which officially closes the case and lifts the legal burden from your shoulders.
What Happens If You Can’t Pay an Outstanding Judgment?
If you find yourself unable to pay an outstanding judgment, things can get more complicated. Here’s what can happen if you can’t pay your outstanding judgment:
- Interest can keep adding up: Judgments often come with interest, so the longer you wait to pay, the more you’ll owe. This growing amount can make it even tougher to get out of debt and cause your money to run out faster.
- Legal actions can be enforced: Creditors have some powerful tools to collect what you owe, like garnishing your wages, freezing your bank account, or putting a lien on your property. These actions can seriously affect your financial situation and day-to-day life.
- You may need to file for bankruptcy: If you truly can’t pay the judgment or other debts, you might need to consider bankruptcy. This can help wipe out or reorganize your debts, but it’s a big step with long-term effects on your credit, so it’s important to talk to a legal professional before making any decisions.
How to Dispute Outstanding Judgments
If you think the outstanding judgment on your record is incorrect, you can take steps to dispute it. Here’s how you can do that:
1. Check for errors.
Sometimes, judgments are made in error, like if you weren’t properly notified about the lawsuit or if the amount is wrong. Start by carefully reviewing the court documents to check for any mistakes.
2. File a motion to vacate.
If you find grounds for dispute, you can file a Motion to Vacate the Judgment. This is a legal request for the court to overturn the judgment, especially if there were issues like improper service or fraud involved. You have only 30 days from the date of the judgment to file this motion or appeal the judge’s decision.
3. Negotiate a reduction
Even if you can’t get the judgment overturned, you may still be able to work out a deal with the creditor to reduce the amount you owe or arrange more manageable payment terms​.
4. Seek legal advice
Disputing a judgment can be tricky, so it’s a good idea to consult with an attorney who specializes in debt or consumer law. They can guide you through the process and increase your chances of a successful dispute.
Frequently Asked Questions (FAQs)
1. Can you buy a car if you have a judgment against you?
Yes, you can buy a car if you have a judgment against you, but it may be more challenging. The judgment won’t necessarily prevent you from purchasing a car, but it could significantly impact your ability to secure financing. Lenders may view you as a higher risk, leading to higher interest rates, larger down payments, or even a denial of credit. Paying off the judgment or negotiating with the creditor may improve your chances of obtaining a loan.
2. What are the three types of judgment?
The three main types of judgments are:
- Default Judgments: Issued when a debtor fails to respond to a lawsuit, resulting in an automatic win for the creditor.
- Consent Judgments: Occur when both parties agree to settle the case before it goes to trial, resulting in a judgment based on the agreed terms.
- Summary Judgments: Granted when the court determines there are no disputed facts and rules in favor of the creditor without a full trial.
3. Do judgments ever fall off your credit report?
Judgments themselves no longer appear on credit reports due to changes in credit reporting practices. However, the debt associated with the judgment, such as the original delinquent account, can remain on your credit report for up to seven years from the date of the first missed payment. While the judgment might not directly impact your credit score, it could still affect your financial standing and ability to obtain credit if lenders discover it through other means.
Summary
Dealing with an outstanding judgment can feel overwhelming, but it’s important to address the situation head-on.
Understanding what a judgment is, how it affects you, and the steps you can take to pay it off or dispute it can make all the difference.
By taking action—whether through negotiation, legal assistance, or direct payment—you can resolve the judgment and move forward with your financial life.
Remember, ignoring the problem will only make it worse, so start taking steps today to regain control of your finances.
