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.
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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.
I have a credit card debt of $19,000 (unsecured). I recently had a catastrophic event (hurricane damage to my home) and I used my savings to repair and make habitable. I also was recently diagnosed with Rheumotoid Arthritis and under doctor care. My spouse and I are retired and receive only SS. Both now disabled so we can never work again to add to our income. We have a mortgage, a car payment and our SS just covers our food, utilities and necessities. I haven’t paid on my credit card for 4 months and now collection agency wants to negotiate a payoff of $7,500. Should I try to get help from family member and pay it. If I pay it and it’s charged off will I ever have to pay the charged off amount
Who is the original creditor? Who is the collection agency?
No, once settled, you will not have to pay the remainder, but always get settlements in writing before you pay.
Hi,
I have a judgment on my credit from 6 years ago. It was an unpaid electric bill in Wisconsin. We are trying to get a mortgage, and the lender already did a hard pull. So when I talked to the collection agency, they said they can’t come down at all. The original judgment was for $800, now $1,924 with the interest.
Is it worth a try to send the collection agency a certified check for half the amount, stating that accepting payment means that the entire debt is settled?
No, using a limited endorsement, or accord and satisfaction on a judgment debt like this, has proven over and over to be a waste of energy in most scenarios I know of.
My husband received a letter from a debt collection attorney. It included a foreign judgment from California to where we reside in Nevada. He was sued in 2010 by a credit card, but never received the original papers in 2010. Can we call the debt collection attorney ourselves and try to arrange a payment plan? We consulted with an attorney and Ch 7 was “favorable” at the moment. But after further discussion, since this is the only debt that my husband has, is it worth it to file for Ch 7? Or can we arrange a payment plan without hiring an attorney ourselves? I know with a settlement, they would want a lump sum payment, but we cannot afford that since we only have 1 income as I am a SAHM.
What is the balance of the debt owed as of now? Who is the named Plaintiff that sued him originally?
The original documents that were attached to the foreign judgment said $8,000. The plaintiff was American Express.
You can call the attorney for American Express and try to set up a monthly payment that you can afford, but be ready for them to push back on what they will accept. Sometimes it is better to save up to settle in a lump sum, and given the circumstances, you may end up paying 50% or more of today’s balance.
If AMEX pushes the collection issue hard they may try to garnish and levy your bank account. If you meet Nevada exemptions you can prevent that, but I would not want his name on the bank account until this is resolved if it were me.
Michael,
Hello, hope the new year started off well. I wish I could say the same for myself. I recently received a judgement that was filed in Dec,2011 in NC at my old address, delivered by the Sheriff. It came to my new address and is listing the court of my old address. It is a notice of right to have exemptions designated.
What should I do? I had received something 4 or 5 years ago and ignored it. I have since then married in the last 2 years and have one joint account. I have my own business, but since the move I am not making much. I am in the process of retraining for another job, and don’t want my wife to get stuck with this. Should I call the person listed as clerk or court or the law firm listed on the paper work, should I get a lawyer.
Thanks,
Ken
Is the judgment from 2011, or did the whole court thing go down after you moved and without any notice to you until now?
What is the amount of the judgment?
What collection law firm is handling this?
Who is the law firm working for (named plaintiff in the lawsuit)?
Hi, I currently live in Texas but recently discovered I have 2 cc judgements against me in WI. These are from now months shy of 10 yrs ago from when I was young and stupid. I had been considering purchasing a home in the future but I know these will be a problem. What is my best course of action? One is under $2000 and the other under $6000 per the court record.
How prepared are you to pay a settlement you negotiate? What if the balances are double (legal interest can be charged on judgment debts)? Did you already have your credit run for a home loan, and if so, when was that done?
Question ; Can a levy be put on a bank account when I am only a third party to it? Not the the Primary account Holder.
Yes, depending on the situation. It is your name and social that gives the debt collector a match for a bank account levy. If, for example, you are on the account of your under age child, there can be a risk. The same thing can be said for a joint account with your spouse, or an elderly parent.
When in doubt contact an experienced debt collection defense attorney in your state.
Hi I live in SC and I got married 3 years ago . Before I got married I had defaulted on 5 credit cards. My husband does not know about these. Everything we have is in his name and I am a SAHM . We do have a joint checking account. I know this is going to catch up with me.. Can they take my car or house? Belongings?
Were you ever sued for the debts?
You would have to be sued and a judgment entered before your bank account or property would be at risk. With the SOL in South Carolina being 3 years for credit cards, it sounds like you are passed that point.
I would come clean with my spouse about this stuff though. Debt collectors writing to you or calling you would spill the beans anyway. And if there are judgments, you will definitely want to address this.
I just got sued by capital one 7 days ago in california. At this stage can a reduced settlement happen? And if so would they accept payment plan or would it be a lump sum?
Settling an active lawsuit is best with a lump sum of money. Offering payments means signing a consent or stipulation to judgment. Not the end of the world, but avoid it if you can.
Good Morning Michael,
Long story short, I need to go to court tomorrow for my credit card debt (State of Illinois). I can’t afford an attorney and I’ve been working with the debt collector (agent) on a payment plan; but, we are waiting to hear back from the CC company on my appeal for lower payments . The debt collector’s attorney insists that we need to go to court. What do I do in this case?
I would always show up for court no matter what. You may end up working out the details at the appearance. I see that as fairly common.
Hello Michael. I have a judgement against me from Ford Motor in FL (in 2012) for $8700. They were not able to get anything from me because I did not have job and any assets. I moved to SC, and just recently they hired another firm Smith Debnam and suing me for same debt/judgement for $11500. Letter before that, they said they would settle for $6900. I still do not have a job, bank, or assets. I do not have such amount. I would like to know what are my options? what should I do? please I need an URGENT advice.
You can stop all collection and get rid of the debt with a chapter 7 bankruptcy.
You can put your head down, and when things turn around financially, negotiate a settlement for less than the full balance.
Hello. I have a few questions concerning a judgement. I went to court in September for a summons from Finkelstein Kern Steinberg and Cunningham on a debt that was originally for Capital One but was bought by Portfolio Recovery. I made a payment plan with the attorney for what I can afford right now, SAHM and student, for $10/month on an $1100 debt. They wouldn’t take less than this. I have paid every month with the payment starting in October. I received a notice from the law office saying they were filing a property line with the court. First off, I don’t have any property. House, car, all assets are in my husbands name. I have a bank account that only holds enough money to buy groceries every two weeks. So, is this the normal process? Why are they doing this since we have a payment plan? What’s happens since I don’t have property? Is my bank account exempt? I live in TN.
Many Thanks!
The judgment collection exemption in Tennessee that applies to your bank account is a shared one. It is a $10,000 wild card that can apply to household goods, your car, and bank account.
I am not sure why they are going for the property lien if you are not attached to it in any way.
When you are in shape to do so, you are likely going to want to negotiate a lump sum settlement.
Michael,
Great site and I enjoy the comments a lot. My father and mother declared bankcruptcy but prior to discharge one of the creditors sold the debt to Portfolio Recovery Services and filed a lien against the house in just my fathers name. The house was in both my fathers and mothers name and the attorney that handled the bankcruptcy feels he has a good shot at getting the lien removed. That said If he can’t get it removed can I negotiate the lien down a bit for a settlement with Portfolio Recovery Services? In Utah , the judgement liens can be renewed every 8 years.. If my mother is still alive and still owner of the home can they renew the lien against my father and the property?? Do collectors like portfolio recovery renew judgement liens?
All judgment creditor renew the judgment liens in this situation. But if I understand what you shared, the original debt was included in the bankruptcy. This should not be a problem for the attorney. Let me know if it is.
If push came to shove you would be able to settle for less, both now and later.
Hi Michael. The question that I have s I had a judgment filed against me in California and actually today is the 30th day I had to respond. I’m currently unemployed although I do receive income because I rent rooms out of my home. I still have yet to respond just because I’m very nervous and scared and I don’t have the money for an attorney and do you have any suggestions any way that I could handle this I don’t want to default but unfortunately I just realize today was the 30th day to respond. Should I call the attorney representing the credit card company and try and settle some things at this point before the day ends ? Any last minute advice you could give me would be greatly appreciated thank you so much. This anxiety is going to kill me. 🙁
If it were me I would file a general denial. Just the filing fee in California is going to set you back though.
As far as calling to settle, you can do that, but the deck is stacked against a favorable outcome.
Hi Michael,
I am going through The process of building a house, but recently found out that I have a Judgment against me from Capital One (from 2011). This was a card that an ex opened bc she didn’t have any credit to open one herself. I was told monthly that she was up to date on the payments. Which I guess she wasn’t.
This happened in AZ. I am currently in TN.
I have the case number and court where the Judgment is filed, but when I call the court house, they tell me they can’t locate my case number or name.
I need to get this settled, but I have no information to contact the attorney who filed the judgment.
Any thoughts on what to do?
You may want to get help from an experienced debt collection defense attorney in Arizona. I can email you a list of attorneys with the experience you need if you like?
Hi Michael, , I just received a notice of writ of execution for a capital one credit card debt of US$4299 (includes courts costs, court officer fee, etc), it says to contact the court officer to make payment arrangements, right now I have no money to pay them, I would like to know what are my options? what should I do? please I need an URGENT advice.
Run your situation by an experienced debt collection defense attorney in your state. You may have something that you have to comply with the court on, and you do not want to ignore that. I know you have no money to pay them, but you still will want to respond to some of these things. What state are you in? I can email you a list of experienced attorneys.
i am in Elizabeth, New Jersey. thank you
Question, I received a letter saying I had a hearing for a debt amount owed. I do owe it. I called the place to make a payment plan. They agreed to the payment plan but said due to where I live they still want to get the judgement but any post judgement interest will be waived.
I did receive a letter from them stating that I owe X amount. And that this is my start date for the payment plan and this is my end date on this day of every month. And they even said in the letter we agreed to these terms.
But they still want to go get the judgement. Is that because they already paid the court cost? And want the judgement in place in case I do not pay. “Which I will Pay.” And I agreed to the full amount not a smaller pay off.
Can they take this back ? And try to attach to my bank account? I can truly afford to now pay the monthly payment plan but if they went in and just empty my bank account that could make me late on other payments for CAR, RENT ETC. which then we all know is a bankruptcy issue.
They did say no action on the judgement will happen as the payment plan is the course of action.
I will say they have been nice to deal with on the phone and it is a debt collecting company.
What they want you to sign off on is a consent to judgment, or stipulation. It is normal when you need a monthly payment plan in your situation. They want it so they can secure their clients interest, which is the job, but also so that if you do miss payments, they can move forward with what you fear, wage garnishment or bank levy.
My experiences is that nothing will happen as long as you are making your payments on time.
Who is the collection law firm and creditor you are dealing with?
I am trying to vacate a judgement that was entered against me. I have a hearing for my motion to vacate the summary judgement on Monday on the grounds that I was paying for a service called Crédit Defense and Wells Fargo failed to uphold the contract.
The debt is mine, I just want to avoid this hitting my credit report…
I have evidence i was aying for credit defense. I also have a contract the debt collector is supposed to sending out for a settlement of this debt of about 60% the full amount.
During my hearing for my motion to vacate the judgement, should I tell the court that I have an agreement with the Plaintiffs attorney in place?
If the plaintiff and I have agreed on a settlement, should I tell the court that this judgement should be vacated because 1) Wells Fargo failed to uphold the full extent of the contract I signed and 2) Wells Fargo has already agreed to a settlement with me so we no longer need to waste the court’s time with this?
Im so confused trying to fight this on my own, but I just donot have the money for an attorney
What state are you in? You may be able to get help from an attorney without having to pay for it, if Wells Fargo violated your rights.
Received notice today Discover is turning over account to attorney for $5100.00. I have not been employed in over a year, no bank accounts or property in my name. What is my next step? There is nothing they can take from me, i have nothing. Should i even waste my time calling I dont have a chunk of money to give to them.
Do you have a chance of raising the money to settle, say for half the balance, in 6 months?
Hi I need help! My husband own on a credit card and there a judgment for a bank levy which was taken out of my account with him on there as a signer. Which they have taken some money out . I have since taken the rest of the money out and going to close that account. I have also open another account with my name only. I just got a notice address to me as a third party. Can they levy my account? I live in California
Call and talk with an experienced debt collection defense attorney in CA. That link is to a video interview with Jeremy, who I have been referring people to for a long time.
Hi Michael,
I would like some advice on settling a judgment against my ex-husband that has resulted in a lien against the home I was awarded in the divorce. Should I do this in a letter to the attorney of record (in writing) or a phone call. My ex will never pay, but I want this gone so I can move on with my life.
You will typically want to negotiate with the law firm on the phone, then get everything in writing before you pay.
Who is the plaintiff that sued your ex? Who is the collection law firm involved?
The plaintiff is a credit union. The law firm is Pressler and Pressler
I’m nervous to call…I don’t want to say the wrong thing.
Thanks for the reaponse
If you want help, set up a consult with me. You can fill in the talk to Michael form in the right column. When I see that I will email you to set up a time to talk.