How to Settle Credit Card Debt with a Judgment
One of my credit cards I fell behind with sued me and has a judgment.
Can you settle credit card judgements like other debts
—Stressed
Short answer
Yes, a judgment can still be settled. Settlements can be negotiated at every stage of the collection cycle, but settling before a lawsuit is filed is easier and usually saves more.
Key points on this page
- Settlement is possible at any stage, including after a judgment has been entered.
- The largest savings usually come from settling with the original bank after a few missed payments.
- A judgment is enforced through bank levies, wage garnishment and liens on real property.
- Judgment balances keep growing at the interest rate set by the court, and most states allow a judgment to be renewed, often ten years plus another ten.
- Wage garnishment removes most of a creditor’s reason to negotiate, so act before it starts.
- If you cannot fund a settlement, bankruptcy can stop a levy, a garnishment or a lien.
The short answer to your question is – YES! CRN does assist in settling debts like credit cards where there was a lawsuit and then a judgment entered against you. Settlements can be negotiated at all stages of the collection cycle.
There are challenges to settling credit card debts that have reached the lawsuit and judgment stage. Before I address the challenges, I want to point out that the best time to settle credit card debts is before a lawsuit is filed, and even before the account is placed with a debt collection attorney.
Watch my brief video about some of the differences between settling credit card debts with your bank and debt collectors compared to negotiating with collection attorneys whether they have a judgment or not.
While this may not be instructive to your judgment debt, you may have additional credit card debts that have gone unpaid and I want you to be aware of the following:
- Settling a debt with your original creditor (the bank you had the credit card with) after having missed a few payments is not only possible, but in your best interest. In fact, reaching settlement early will often achieve the best savings result when negotiating is done correctly.
- You may end up with credit cards that are charged off and placed with outside collection companies. This is the next best (sometimes the best) opportunity to settle a credit card account you could no longer afford to keep payments current.
- If your overdue credit card account lands in a collection attorney’s office, you can still settle the debt before any court action is filed, or at a minimum, negotiate favorable payment terms.
There is a science to navigating the collection stages I briefly outlined above. Timing, balances, who your credit card debts are owed to, and your ability to come up with the money needed to settle the debts – all will affect the strategic design of which account to settle with first, second, third etc…. It is important to have a plan to follow if you want to systematically and successfully settle debts and save the most money in the process. CRN is excellent in assisting people in this regard.
If you want to learn about how to settle your debts no matter what stage of collection you are in, we have a ton of resource pages to help you. I recommend starting at the beginning of my debt settlement section.
If you are floating out there with several unpaid credit card accounts with no real financial resources to handle the situation, or a plan for doing so, you owe it to yourself to learn if you would be better off filing for chapter 7 or chapter 13 bankruptcy before a lawsuit is filed, or now that a judgment exists. You can consult with a bankruptcy attorney for free. I recommend talking with more than one.
Collecting on credit card judgments can be challenging too.
The primary ingredient found in any debt settlement recipe, whether there is a judgment or not is… money. If you have enough of this ingredient you need to be aware of a few things.
A judgment is just a piece of paper. It’s the court sponsored enforcement of that piece of paper that is the problem. You could end up with liens placed against your real property, your bank account levied and wages garnished directly from your employer. There are even instances where a sheriff can show up to take a look around at your “stuff” and inventory personal items that can be taken to satisfy a judgment (this happens, but relatively rarely).
Judgment debt, whether past due credit card bills, personal loans, medical bills and other debts, are easier to negotiate and settle while maximizing your percentage of savings results if:
- A bank account to levy cannot be found because one in your name does not exist, or does exist but is maintained with little money in it;
- If a W-2 wage source cannot be located to garnish and;
- Where there is no real property lien, or where the lien is filed, but has been in place for some time and remains unpaid.
The one thing you can control is whether you have a bank account with your name attached. If you do keep a bank account open, realize most bank levies are attempted at the beginning, middle and end of the month – when you are most likely to have deposited a pay check, or other money to cover bills.
If you have sources of funds electronically deposited, you may want to elect to have paper checks issued to you until the credit card judgment debt is resolved.
The lien on property will generally not involve forcing the sale of the property in order to satisfy the judgment. You should look to resolve the judgment prior to selling the home (negotiate a settlement before listing if possible), or refinancing (settling before a lender does a hard credit pull is often best).
Wage garnishment is a major concern. Once your wages are attached the creditor has little reason to work with you at resolving the debt for less because they will continue to get paid unless:
- You prove you meet garnishment exemptions in your state
- You leave that job
- You satisfy the judgment
Warning: Your credit card judgment debt grows from interest and can often be renewed!
Interest is accumulated at the rate set by the court, or the maximum allowed by law in your state for judgment debt. While you may be able to be creative in how you avoid paying the judgment you must realize that the balance of the judgment is likely increasing.
If you are struggling with overdue bills and other expenses and are unable to come up with a plan to get rid of the judgment or lawsuit through a negotiated settlement or payment terms you can afford, the fact that the debt is increasing should concern you. Stop and consider what your options to resolve the credit card judgment will look like next year. The year after that.
Judgments do have a “best collected by” date, but can be renewed. Judgments have a shelf life with a time frame specific to your state. Most states allow for a judgment to be renewed prior to expiration. For many, this is a ten year time line and renewal allows for an additional 10 years. That’s a 20 year shelf life!
Identify all resources you can tap to fund a settlement offer or payment plan successfully. If you cannot reasonably come up with the money to settle the debt, or make payments after reaching agreeable terms, look to bankruptcy to stop a bank levy, wage garnishment or lien on property.
Those are the unfortunate realities.
I highly recommend anyone with a judgment, that needs to be resolved in order to buy or refinance your home, to watch this video interview I had with a former debt collector: https://youtube/QpdDks73QUw
It is always best to put a plan together to address delinquent debts before a judgment becomes the concern and you are forced into crisis mode. If you have other debts, you can still put a plan together that includes resolving the judgment too, but it is important to not waste any time in doing so.
Need some personalized help?
If you would like confidential help you can use any of the boxes below to connect with me. You can also post in the comments below for feedback. I answer those regularly.
Not sure where to start? Click on the big blue “Get Debt Help” button at the top of the page.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi Michael,
My fiance recently had to go to court for a debt settlement with Capital One Bank. During the hearing, the attorney for the bank offered him a settlement of 70% of the debt to be paid off in 36 months. We would like to be able to respond with a letter to offer 50% of the debt to be paid off in 24 months. Do you think this is feasible? How should we word such a letter? Is it even worth making a counter offer?
I have read through everyone else’s questions and there isn’t quite the same scenario. Any help is extremely appreciated!
Thank you.
Also, for addressing the letter do we address it to the court or the suing party address??
Thank you again!
It is totally worth it to make a counter offer. I would do that on the phone though, and not in writing. Once you agree to a settlement get them to draft the written agreement and send it to you before you pay.
OK! He will have to try that. Thank you so much for your help.
I have 3 judgments from 2009. I got a letter in the mail of the total which is 13000 but there willing to settle for 5200. My questions are these:
1. If I pay the 5200 will it come off my credit?
2. Will it show up as a charge off or something else, if so am I still able to buy a house if it says charge off?
3. When I call the creditors to settle this, what should I say to make sure it comes off my credit the correct way so I can buy a house?
My credit it about 700 and I’ve been current on all my bill for the last 3 years. Please help thank you
Judgments from 2009 have a 7 year shelf life on your credit reports. They may already be off.
You are still able to buy a home with charge off on your credit. But those would not be on your credit any longer, only the judgments might be. But it does not matter if the judgments fell off your credit already. Unpaid judgments prevent you from buying a home. Lenders see them because they are part of the public record, and not just because one appears on your credit report.
I would not say anything about your credit reports. They are only going to do what is legally required of them, and that is what you want anyway. Talking about credit reporting serves next to no purpose.
My husband has two judgments from 2009.
One judgement was for about 10.5K originally. It is from BB&T bank for a car loan. I’m not sure if they or someone else owns the debt. I also have no idea how much the current amount is. And we haven’t heard from them since the judgement took place.
The second judgement is from a Capital One credit card, originally for $1,400 and now owe $2,500. We received a letter from an attorney about 6 months ago and a sheriff deputy came to our house to see if we had any assets that could settle this debt. We didn’t have anything they could take. And we live in NC where wage garnishment is illegal. Portfolio Recovery Associates owns this debt now.
So we have about 9K we can use to try and satisfy these judgements before we pursue buying a home. Do you think we will be able to settle both for 9K or less? What’s the best way to do this?
It is possible. The key is going to be getting the best deal on the old BB&T account. Call me for a consult so I can dig into the details and offer better feedback. You can reach me at 800-939-8357, ext 2, or fill in the talk to Michael consult request in the right column of this page.
Hello! I’m in CT and I’m wondering if there is any chance of settling with a Judgement Attourney that has, as of yesterday, began Wage garnishment on a debt I owed to a Capitol One credit card. I received a letter and paperwork from my job less than a month ago that this process would begin, and I thought there was nothing I could do and let the process begin. Upon further researching, I’m wondering if there is still an option for one-lump sum payment and if its worth me reaching out to this attorney’s office on my own and how I could go about achieving a settlement, Does that in itself require an attourney? Any help is GREATLY appreciated! Thanks for your time.
Watch this video about dealing with judgments and garnishment. You are not in great shape to negotiate much of a reduction.
How much is the judgment for? How much are they getting out of this check?
Thank you for your response. I’m at 25 % of my check every 2 weeks until I reach about $4300. I understand that I can file with the court for a better dollar amount, but I’m in a position where I can get this cleared up in less than a year at this rate. I was never notified of this happening until my job sent the letter announcing the garnishment to start 20 days later. Has been a real shock actually, this debt is very very old. Attorney worthy? I have no idea.
When in doubt, run your situation by an experienced debt collection defense attorney. I sent you an email with contact details to some I know have experience in Connecticut.
Thank you so very much for your attention to me and other people in a jam who don’t know where to begin. Your input is appreciated.
I live in Texas and have a judgement from Lvnv from an old sears bill. It was filed around 8-9 years ago but now they are going to renew it. I just received a letter from lvnv telling me I have 30 days to validate the debt. It came off my credit after the 7 year window. Do you think they would take a 50 percent settlement. The first judgement was by default. The judgement is around 5k with interest and fees.
It was originally sears. Then currently lvnv but the letter is from first national collection bureau. And it’s 30 days to dispute the validity of debt.
You have a shot at 50% settlement.
Don’t be fooled by the reference to disputing or requesting validation. They already have a judgment and would just send you a copy of it. If your goal is to negotiate and settle, focus on that.
I have received a notice of judgment filed from Midland Funding, LLC. The amount was for $2219. I do not know what the original amount was. I do not know when the last payment was made on this account but it was charged off Dec.2012. I contacted the attorney office that filed this suit and they are saying I owe 2421.27 plus $75 court fees. I did not make an agreement to pay and told them I would like to appeal this judgment. Do I have a leg to stand on? I cannot pay 50% of what is owed.
What state are you in? Were you aware of the lawsuit? Did you defend it? When did judgment get entered in the court record?
Please contact me Michael. I could use your assistance!
Thank you!
You can fill in the talk to Michael form in the right column of this page, or call me at 800-939-8357, ext 2.
What happen after settlement and payment plans are paid off?
The judgment will updated to show as paid/satisfied in the court record. And you can move on with other financial goals.
I receive a Writ of Summons last night and it is new to me. I know I owned the money to this specific creditor, but it was out my radar as I haven’t received any mail or telephone calls asking for payment. I lost my job early 2013, besides being out of job for almost a year and half I found jobs that was temporary or with a low salary compared with the salary I used to have before 3/2013. I just found a full time job and I know I can settle this with a payment plan. I called the attorney office (the one that is handle this case, and referrer as a plaintiff) left couple messages already, but have heard from them as yet. Please any suggestion in how should I handle it, I will appreciate.
You may want to consider filing an answer to the complaint, or general denial, so you do not end up with a default judgment, and give yourself more time to deal with the attorney to settle this.
Hello,
My judgment was just removed from my credit report on September 21st, and my question is can it be renewed after it has fallen off of my credit report? Also, if I call and try to pay this debt since of course I still owe it, will it show on my credit report again. They were never able to garnish my wages because I haven’t been working and been in school and don’t have a bank account on my name. If i try to get a bank account now since the judgment is gone can they still take money from my bank account? If I get a job soon, can they still garnish my wages. Please advice me on how to settle and pay off this debt now that it is off my credit without it showing on my credit again. Basically, what happens now that the judgment has fallen after the 7 years?Thank you for your time.
An unpaid judgment can be renewed after it is too old to stay on your credit reports. Judgment renewal depends on state law.
When you pay or settle a judgment it does not get to reappear on your credit when it already was removed from age.
The judgment is not gone because it does not appear on your credit. It is still enforceable through garnishment and bank levy.
You should still look to resolve the debt. How much is owed now? What is the name of the plaintiff?
I need your advise desperately. I had a credit card a while ago with Chase (Original balance was around $3500 or so. I can’t recall exactly) and stopped making payments on it because of my husband’s job loss after the recession. Years later (about 2 years ago) I got served to go to court for this debt that Midland Funding had purchased. They had an attorney named Mark Johnson and they said that they money owed now was like $5500. I thought that the statute of limitations had already passed so I got a lawyer so he could fight that for me, however, he somehow screwed up and couldn’t prove the statute of limitations had passed and I ended up being responsible for the debt. I agreed to pay $100/month and made like 8 or 9 payments. Then I got miscarriage, had to have surgery, my husband got appendicitis and had surgery, and I was also paying tuition for my school. Basically, we had all these bills and I could not afford the payments so I stopped making payments since I didn’t really have any assets (house or cars or much money in my bank account) that they could take away. About 1 year ago my husband got into a really bad financial situation and we were left with a debt of about $27,000 so now it is even more impossible for us to pay this judgement because we are trying to pay off this bigger debt that we have. Trying to pay off a family member that loaned us some money to pay this.
Now (just yesterday) about 2 years after I stopped making those payments, all of a sudden I find out that my joint bank account was wiped clean. They took $1500 which is all the money I have to make payments for rent, food, and bills, and other debts that I have. I really want to find a solution for this. Want to settle but I don’t know how to work a deal with them since they already have a judgement against me and I can’t really pay a big lump sum. They already have the $1500 they took from the bank account and around $900 that I paid to them during previous months. Is there a way to settle with them if I pay just a little bit more in cash or with a credit card?
I am working as a contractor so I don’t have wages, however, I am scared that they will take this away too since it is the only income we have. I am also scared that they will take away my tax refund since we are barely surviving financially and every little bit helps.
Please, I need your help!
Call in for a consult Loida. Mondays are tough to reach me without an appointment, so leave a message if you have to. I can be reached at 800-939-8357, ext 2.
I have two judgement 8 years ago. I lost my job due to disability. I no longer work. The judgments were on my credit report but now they fall out. I did try to settle with them but they took to court to get judgement on me. After that they never contacted me for collection, not by phone nor by mail. They were Chase and Discover. They know that I am disabled. I have no assets. Were they forgiven since they bailed out by government, or they are still looking for my income? I don’t work, and I live with my family.
The judgments are likely still valid. They do not go away, though depending on when your Chase judgment is from, they will not pursue it or renew it.
When did Chase get the judgment?
What are your goals for resolving them? Have you looked into chapter 7 bankruptcy?
These from 2008 and 2009. I did try to settle with them before court but they would not one their attorney suggested file bankruptcy . Which I am not in favor. Because of health situation there lot of run around and I have trouble walking . The attornies had seen me on wheelchair.
If the judgment is in Chase bank’s name, I am not sure they will renew it. They abandoned collection on a ton of judgments, but you have to wait for them to fail to renew.
If you are judgment proof and on disability, I am not sure there is any reason to fret over this. But if you wanted for some reason to resolve the Discover judgment, you are likely looking at having to come up with half or more of the balance owed.
Thank you, I appreciated your help. Thanks again
Judgement is from Illinois court.
Hello Micheal,
I have a judgment against me in Washington state from an old BOA credit card it was filed in king county superior court on 08/15 2011 and is scheduled to come of 07/2018. my credit report says it is for 7,372.00 the plaintiff is FIA card services NA. I am wondering if it is possible to settle for a lesser amount before they renew the judgement against me and add an additional 10 years of a negative mark on my credit report. If so what would be the best way to go about this? Thanks for reading
You will likely have to negotiate with the collection law office FIA sent the account to. Can you pull together half of today’s balance? It may take more than that.
The judgment renewal does not mean it can stay on your credit reports longer than the 2018 date. But you can still be garnished, bank levied, or have a property lien without it on your credit. And you will typically not be able to get or refinance a home loan with an unresolved judgment, even after it drops off your credit.
Hello Micheal,
Thanks for the reply. How would I find out who the law firm is that FIA used for the judgment? Would I need to call them or should I write a letter? Will contacting reset the clock on SOL. This is the last ding on my credit report that I am trying to fix and I am not even sure how to go about starting to try to to settle it. Thanks for reading.
The SOL for a judgment does not work like the SOL if you were never sued. There is no reset of the clock to sue because they already did.
You can call FIA and they will tell you if they still have your account with the attorney they hired to sue you. If they don’t, they will tell you who they have your account with, or you may be able to deal with them directly.
If you want help call in for a quick consult at 800-939-8357, ext 2 rings to me.
Hi. Am hoping you could help us out with a question. Today my husband attempted to pay for gas with his debit card. To his surprised the payment didn’t go through. After a phone call to his bank he found out his bank account has a negative $100 and over $2,000 taken out. The bank explained to him that his wages are being garnished. Many years ago he had a credit card with Compass Bank, they have serve him a judgment. So we are out of money with checks being bounced and $0 in our pockets. Please advice. The judgment was served in Phoenix Az but we have reside in Pensylvania for a year now. He never closed his bank account in Az since is the account we use to pay bills etc. he gets his paycheck deposited electronically every 2 weeks. We don’t know what to do. It looks like the debt is for over $20,000. We don’t have the money to pay at the moment. Please advice
Check out this video about dealing with the risks from judgment collection. Set up another account like I point out in the video until you can put together a plan to resolve the judgment.
You could also file chapter 7 and wipe out the judgment.
I have a judgement from my business-against me personally. i entered a payment plan 5 years after they filed the judgement. the original judgement has interest and fees, i entered a settlement agreement for just the principle, and have been making payments for the past 3 years-no late payments in that time
should they redo the judgment reflecting the agreed to settlement amount? .
i just recently applied for a loan and they found the judgement. the bank wants it satisfied before they go ahead with the loan. i am prepared to settle for 50 cents on the dollar–what i am going to say is it will take me 12 years to pay this off at the current payment plan– or you can settle with me now. do you think this will work.? original debt $36658.00 down to $28600.00 50C on the dollar would be $14.300.00
do you think i can get them to settle for $10.000? that would be 35C on the dollar
also could they remove the lien because i have a payment plan and have not been late for 3 years?
How soon are you trying to close on the loan?
What is the name of the plaintiff?
at the current payment plan it will take me 12 yr to pay this off. so i was going to make an offer at 1st of $8000.00 then see what they come back with. i am hoping that i can settle for no more then $10.000 if you include the $7200.00 i will have paid in payments the amount paid on debt would be $17.200.00
I would have a better sense of things if I knew what the original debt was about, and the name of the plaintiff. In other words, the back story.
How soon you are trying to reach your goal matters too. If you are trying to get something closed in a hurry, it can be more difficult to hit your percentage of savings goals.
I have an old unpaid judgement from 2003 that i ignored (young and dumb). It no longer show on any credit reports. Recently the collectors revived the judgement and now have me up to $10, 357 being owed with interest and attorney fees. They mailed me a letter stating their intent to start ganishment unless i pay in 15 days. I have $5200 i can pay right now on this. The told me I can only settle for $7800. Is that not negotiable? Is there a correct way to go about doing this?? Would they entertain settling for what I have right now to avoid me paying for the next 2 years using the garnishment calculation? thanks in advance for your input. I’m so stressed over this and want to figure out how to prevent garnishment.
Has your employer already received the notice of garnishment?
Unless you have a shot at full or partial exemptions applying to you, this late stage of collection puts them in the drivers seat. They know they will get paid the full amount (often with interest) as long as you have the job.
It may be possible to settle for lower than that 7800, but in my experience, it likely won’t be by much if your employer has already been notified, and you cannot contest the garnishment and meet some of the exemption guidelines.
I live in PA, was hoping to buy a house in the next six months. I checked my credit report and see there’s a judgement from 2011 for 5400 from an old credit card back in 2006. I was never served because they had an old address, I have no idea what to do. I started doing some research and it seems i could try to negotiate a settlement or payment plan, but should i have an attorney represent me? Could you direct me to a company or program that could help me with this so that i don’t have to give up my dream of owning a home?
Who is the judgment creditor (name of plaintiff)?
Can you raise about half the amount of money owed on the judgment? If so, how long will that take?
i have an expired debt (there is nothing bad on my credit report infact i have a 725 credit score) so this expired debt all of the sudden showed up as a garnishment at my employer. i’m so embarrassed and i would like to try and settle it. do you think that that is possible? the debt is for $1170. with all of the taxes and interest included. how much do you think they will settle for and will they even do it, with the garnishment filed. like 30% or something? – they have yet to take any out of my paycheck, as i just got the letter today from my boss. please help, i don’t even have parents around to ask for advise. i called 2 hotlines on my break but was left on hold and never even spoke to a real person. 🙁
It sounds like you have a judgment. Judgments may fall off your credit reports, but they can still be collected. You can contest the garnishment through the court. If you are determined to be fully, or partially exempt, you can prevent some or all of your wages being taken.
Did you not know about the judgment at all until now, or was it something you thought had expired off your credit reports and was over with?
i got a loan for a vehicle last month and the receptionist at my work said that someone had called to verify my employment. i thought that it was my credit union, verifying i was indeed employed but when i looked up the number on the internet and saw that it was a collections firm. i haven’t gotten anything in the mail in years.
also, if they agree to a settlement price can i have them email me the agreement. i don’t want to have to wait for the actual mail to come to get this paid off.
Some debt collectors will email the settlement agreement, but not all do. Faxing is standard, so do that and you will not have the mail lag time.
New credit inquiries and loans showing on your credit reports will often alert debt collectors. They set alerts to be notified of those types of changes.
Hello micheal, I have recently been served for a debt to discover for 1,700+. This is from a debt lawyer in raliegh They’ve offered to settle for 1,450 but there’s no way for me to come up with that much money. I’ve been in and out of work and falling farther behind in bills so can’t put up much money at all. They’ve also presented me with a consent to judgment, but I don’t want all of the negative affect from that. And don’t have much money for a lawyer. Any suggestions?
You can look to negotiate a better outcome, but how much can you pull together?
You can defend the lawsuit in order to get yourself some additional time to pull money together. Probably a few months as busy as the Raleigh courts can be.
Anything I’m able to pull together would impede catching up with bills. In a few weeks I should be in a comfortable place to pay a retainer fee but I can’t be sure of a date.
You have to file an answer by a certain time or they move to default judgment. Ask the court clerk if they have a basic over the counter form you can use as a “general denial”. You are being sued, and it is best to speak with an experienced debt collection defense attorney (even if you cannot hire one) in order to get your bearings.
Hi Michael. I went to court a year ago on collections with Capital One and agreed to pay $50.00 per month to pay it off. The Balance at the time was about $6,400. After paying $500 over the year they tell me the balance is 6,700. Of course I was shocked that after paying all of that money that my balance is now higher. The collector said it’s a 12% interest for the client. I told them I was not informed of such tactics and felt I was being mistreated. I also told them there is nothing on the judgement paper stating anything about interest. What can I do? I live in Massachusetts. Thank you.
They should not be able to charge interest if the court did not set it. Look over all of the filings and make certain the court did not include what they are allowing for interest. Call a court clerk and ask for help locating the judges reference to interest. Let me know if no interest was referenced and lets go from there.
I have the agreement for judgment that is signed by me and the other party and it definitely does not say anything about adding interest. There is one line that has a a box unchecked saying postjudgment interest is waived by the plaintiff. I can still call the clerk on this matter though. Where to go from here?Thank you.
Double check this with the clerk. After that, if they are trying to force payment for more than they should, I would talk to an experienced debt collection defense/FDCPA attorney. I cam email you contact in yours state if you like? Where do you live?
It is also important to file complaints with the CFPB about this kind of thing. They are currently engaged in rule making that will greatly impact all areas of debt collection and would like to hear from you.
Thank you. I will call the clerk’s office. I live in Peabody, Massachusetts. I appreciate the help.