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 am in Texas and have a judgement for a credit card debt that was filed & granted in October of 2011. I just received paperwork from a law office with a copy of the previously granted judgment along with post judgement interrogatories. I’ve already called the law office and left a voicemail in hopes of negotiating the amount down & settle at a hopefully agreed upon lower amount in full as I am in a better position to pay than I was in 2011 just not in a position to pay the full amount.
My questions are as follows:
1) what are my chances of negotiating the amount down?
2) what information/documentation/ assurances should I ask of them prior to paying, should an lower amount be agreed upon?
3) this was never reported to credit agencies so it never showed up on my credit report. If we reach an agreement how can I ensure that they won’t report judgement paid after the fact
Negotiating debts in the courts tend to be between 50 and 80 percent.
It is common to get a settlement agreement from collection law firms before you pay the settlement amount. I would not pay without it.
Most judgments no longer appear on our credit reports since July 2017.
Hello Michael ~ In a nutshell, I had a $500 credit limit CC that was closed by them, Sam’s Club thru Chase, for my newly poor CC rating (financial difficulties due to relationship break-up). During this time, I had moved from my home, then back again. It appears that my original address change request was never processed and unbeknownst to me, a court date was set and a judgment was processed by Midland for nearly double the original credit limit. The mandatory stayed window expires tomorrow 6/28/19. WHAT options do I possibly have to resolve this problem. If I had know a court date was set, I would have been there! I do not know what to do. Any and all advise would be greatly appreciated. Thank you!
When was this court action originally filed?
Hi Michael, I think back in May … I’m currently trying to find the original paperwork…
… or as early as April 2019 … I can’t to seem to find the super secret special spot of the day I last saw it 🙁 … I finally found a notice that provides an address that appears to be the same as the collection agency, should I be contacting them via letter by USPS, if so, what do I say? Or contact the court admin listed on the judgment?
Thank you for your time!
I would talk to an experienced debt collection consumer law attorney in your state about your options to file something that could potentially get this set aside for lack of proper service. If you moved out of the county they sued in prior to the action being filed it may even have been filed in the wrong jurisdiction.
Thank you for your time and guidance! 🙂
I received a summons from an attorney suing for a credit card bill…My credit report shows paid (settled less the amount)…Zero balance…It was so long ago…I can’t remember when…Iam getting ready to wright my response letter..What should I say about what’s on my report? Should I attach that information? Please advise…Time sensitive..Thank you!
Do you have a copy of any agreement you made on this account in the past, and proof of payment? It would help to include that to put this behind you. If you have everything showing this has been taken care of, and while still filing a formal answer with the court, I would also file a debt collection complaint with the CFPB.
12 years ago we had to default on a credit card. They got a judgement and lien on house. Nothing was heard of from collector in 10 years. Letter came yesterday, they sent a subpoena to bank -who holds mortgage- for loan application and the name of bank that last 6 payments came from. Credit card was under my name. Mortgage payments made solely from my husbands account. One quick note. We did try to settle for a 50% of debt about 8 or 9 years ago. They refused. Advice at this point?
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What is the avg fee an attorney charges to help settle a judgement. I live in Los angeles. I have several questions regarding a judgement filed over 10 years ago-
You will want to call a few with the experience you need and get a quote. I can email you a list if you like?
Yes, I would really appreciate it! Thank you
I have a judgement against me by portfolio recovery associates. its been a title maybe four years. The amount is 5300.00 I want to negotiate a settlement but can’t afford to pay it all. should i call them or write a letter. do i need a lawyer to get in tough with them.
I like negotiating over the phone to reach an agreement and then get that in writing before paying.
You do not necessarily need a lawyer to get your PRA account negotiated for less. But if you do not feel confident with doing this yourself, it would help to have a pro. You will have to budget money for the settlement and your attorney.
I can email you a list of experienced consumer law attorneys that deal with PRA regularly if you like? What state are you in?
I live in Colorado. In September of 2011 there was a lien placed on my commercial property. It is from a Credit Card. I had been making payments on this credit card. Not every month, but I would make payments when I could. I never knew about a court date or a judgement against me until this week when we are looking into putting the property on the market. I also have other property in the area and those do not have a lien. I am a little confused as to how they could file a judgement without me even being aware of a court date or notification of any type. It is for $15,000. Obviously I can not pay that in full. I am still making payments with this company which has bought out the debt. I am looking to remove this lien on the property. The judgement does not show up on my credit report. In September it will be 6 years that this judgement has been in place.
Who is the named plaintiff in the lawsuit? What collection law firm handled the case? What state are you in? Who are you making payments to right now (I read your comment that your payments are regarding the judgment at issue)?
The plaintiff is Cach LLC. However P Scott Lowery bought it. They are the law firm. They are the ones that I have been making payments to. I am in colorado
If you are currently making payments it can be difficult to get a good settlement worked out with Scott Lowery office. If you stop paying you have a good shot at the better outcome, but that too has risks.
Call in for a consult and I will dig into more details and sketch out a map for you to follow to get this expedited. You can reach me at 800-939-8357 ext 2.
First, let me give you some info. My husband & I married about a year & half ago. I would like to handle the negotiation to settle a judgement in his name. Amount of judgement when entered into court in 2012, $12,200 owed to Discover Bank. As of today, amount owed over $17,800. I spoke to the lawyer’s office a couple months ago (1st communication since default in 2010). They told me in order to discuss/negotiate they would need to speak with him. Is this true or could he give verbal permission on the phone for me to discuss the matter? We live in NC. The only other debt owed is a mortgage which has been paid on time for about 15 years, so there’s equity. No other credit cards, auto loans, etc. We would like to refinance, (but not an urgent matter). Over the past summer I was able to have a couple liens cleared from his credit report & would like to take care of this judgement. When you mentioned the possibility of 50% negotiation would that be from the original amount owed or current amount? We would be able to make payment in lump sum, up to 40-45%, but would like it reduced as much as possible. Any feedback/suggestions would be greatly appreciated!
It is normal to give verbal authorization while standing next to him and have him pass the phone over, but I have seen a few limited situations where a signed POA was still requested. You can fax those in usually.
You are nearly always negotiating from the balance owed at the moment. Check to make sure what the judge granted as a judgment amount in the order, and what was set for interest in that same order. DO the math and make sure it adds up to what they are quoting you now.
Is it best to pay off derogatory credit first or pay off things that in collection
How late are the bills that are in collection? How late are the bills that you are referring to as derogatory? Depending on the answers, they may be one in the same. In which case I would focus on settling with:
1. Who I can get the most debt resolved with the least amount of money.
2. Who is the most likely to get aggressive and sue me in court.
I live in Kansas and had a civil judgement in Circuit Court for medical costs awarded in 2012. I just found out about this situation. Do I have any recourse if I was not served with notice? What if another person not named in the suit signs for the court notice?
Who was the other person that signed? Was it at the correct address?
My fiance just signed for a certified letter from a debt collection attorney for a judgement on a credit card he had from over ten years ago. He has not responded to the letter yet. I do believe that this is a time barred debt and the statue of limitations has expired. He has contacted them two years ago when he received a letter in the mail and did not claim this was his debt was just trying to get info on the letter we really need help as to what we need to do next before he responds to the judgement there is no court date on this paper but it is stamped from a clerk of superior court can you please tell us what we need to do next!
What state are you in? When did he last pay on the account? It is not clear whether this is already a judgment or not. Can you clarify the heading of the papers he received?
I defaulted on a credit card w/ Bank of America and am being sued for $3,500 (DUMB on my part of course). My question is if I am being sued by a law firm representing BOA should I contact the law firm or BOA in attempt to settle? I’d like to settle before the pre-trial phase if possible. Just in general experience will these firms/banks be willing to settle for less than the total owed. Thanks in advance!
Once your bank send the account to a collection law firm they will instruct you to call the attorney office to resolve the debt, even more so when they already filed suit.
You can settle for less once sued, but you will want to be realistic about what you can save in the process. Check out this post and the many comments for more settling out of court.
my question doesn’t have to do with credit cards but medical bills.. I met with a collection agency attorney last year at my local court house to set up a payment plan.. I set up what I can afford at the time with the understanding that I would pay it off at tax time.. well my ex claimed my kids this year ( we don’t have a legal agreement yet) so im not getting enough back to cover it and they said if I don’t give them all my refund then I will be held in contempt of court and possible throw in jail.. im freaking out because I have 2 small kids and don’t need to go to jail.. is this possible? I did speak with a bankrucpty attorney and she said I can do a chapter 13 but will that stop all this from happening
What state are you in? I want to email you a list of consumer law attorneys that focus on debt collection violations. They often take cases at no cost to you when the violations are clear. And I believe you may have one.
Do you think Portoflio will vacate a $2,000 judgement paid in full?
Vacate? Umm… no.
I have a jugdment of $6,400 to pay Portfolio Revovery. Who should I contact the try to settle with a lum sum payment? And do u think $1,500 would be a reasonable amount to offer?
Judgment debts are really hard to settle for 50%, so no, I do not think you have a shot at $1500.
You typically have to negotiate the settlement with the attorney PRA used, but the older the judgment, you can sometimes Call PRA direct and get the deal done.
I have a judgment entered against me from back in 2009 for $5000 with Bank of America. Today, this debt is handled by LVNV Funding, LLC with a total of $11,400. I tried to settle with them over the phone, but they were requesting my bank account information, and I was not comfortable providing that information, thus I sent them a letter offering to pay 50% of this amount in a lump sum. It has been over a month now, I haven’t heard back from them. At this point, do I have any other choices other than bankruptcy to avoid a wage garnishment?
Have they noticed your employer to garnish?
I am not a fan of sending offers out in the mail. My experience is that calling to negotiate provides the outcome we want, and to get the deal negotiated verbally first, then get it in writing from them before paying anything.
If you have 50-ish percent at the ready, and they do not have a wage or bank levy out currently, I like your chances. If you want help call in for a consult at 800-939-8357 ext 2.
Hi Michael,
A collection attorney just filed on the 23rd for a ~3,500 amount. It is not from the original creditor, it is on behalf of SVP. The law firm is Schrier, Tolin & Wagman, LLC. I could probably get half together to pay a lump sum before court. BUT I have 4 other cards out there in collections 🙁 If I settle this one, what is the likelihood I will get sued for the others? I am currently a full time student with no additional income outside of student loans. I am in Maryland.
List all the creditors or debt collectors, and include the balance owed and when you stopped paying. I can offer the feedback you need then.
If a judgment was enter 10 years ago with the court and an agreement payment was enter and when the first payment was made the creditor send a letter saying that they were not going to accept the payment because it wasn’t enough, now after all that time they me to pay them double the amount of the original settlement, what can I do?
Judgment interest can accumulate to the point the amount owed is double, or even worse.
Can you pull together a lump sum of, say half, in order to settle the judgment and be done with it?
My original judgement was in 2000 ,it renewed without my knowledge in 2014 at 3 times original amount ,you said 10 years is limit that is possible,my state is arkansas and my question is how is this possible when statute of limitations on contracts is 10 years and that has been well exceeded
That 10 year SOL on judgments in Arkansas can be renewed for another 10 years.
Hello Michael;
I really like your site and info- here goes- I defaulted on a Capital One credit card after the crash in 2008. I live in Florida. Portfolio Recovery Associates bought my dept of about $15,000 and used Hayt, Hayt& Landau as attorneys to take me to court, I had an attorney, but lost the case. In Oct 2013 they filed a judgement against me and won for garnishment of my wages. I filed a Claim of exemption due to income, and a dependent living with me at the time, with no attorney for my defense, and lost.
I own my own company, an incorporated Real Estate office where I am the president, and don’t really write myself a check. I have never up to this point made any payments on the garnishment to these attorneys. I recall a phone call at one point that the attorney said he could no force me to pay?
I don’t really know why he said that?
I am now also on SS, but still working in my company making the min. allowed under the social security laws. They put this judgement on my credit report back on Oct 2016, before it had not been
on there. I am a veteran and have been approved for a VA loan, but have to make a payment, or get this judgement removed, to go forward. The judgement is now up to about $21,000 with attorney fees, interest ect. I have no way to pay this at this time, or in the future
What in your opinion is my best course of action – I can maybe come up with $2000 or so for a lump
sum settle – would they likely talk to me due to the situation or is this a loss cause?
You could file chapter 7 and wait 2 to 3 years and get your home loan through. Otherwise you are likely looking at settling for half-ish of the balance owed now. I do not see any way PRA will accept a 10 percent offer.