What is a Credit Card Judgment?

Credit card judgments are awarded by a court to a credit card company, or their debt collectors, against a consumer who has failed to pay a credit card. However, the period between the time you stop making credit card payments and a company obtaining a judgment can be extremely long depending on the credit card companies procedures.

How is a judgment awarded?

Typically if you stop paying on your credit cards, there is a process that is put into place. The first thing that will occur is your credit card company will attempt to reach you. This may include calling you at home or at work and they may also contact your family members by phone. In all cases, these calls must comply with the New York Consumer Protection Laws. This means they may not contact you before 8am or after 9pm, they must not call you at work if you request they stop doing so and they may not disclose they are calling about debt to friends or family members.

Provided a debt collector has exhausted every avenue available to them, they may elect to sue you in court for the amount of your debt. Consumers should be aware that any debt that has not been paid for six consecutive years cannot be collected even by a judgment. If you receive a notice that you are being sued, you should appear in court, and whenever possible, you should be represented by a lawyer.

Provided a judge agrees with the credit card company, they may be awarded a judgment. This will allow the creditor to garnish your wages and in some cases, place a lien on your home, your car or garnish your bank account. New York banks are not allowed to turn over your entire bank account balance, they must leave a minimum of $1,750 in your account and in the event that your income is primarily from sources that are not eligible for garnishment, they must not deplete your account to less than $2,500.

Can bankruptcy cancel a judgment?

This depends largely on the terms of the judgment. In some cases, it may be possible to get a judgment waived in a bankruptcy proceeding. For example, if a creditor who has obtained a credit card judgment places a lien on your home prior to your filing bankruptcy, it may be difficult or impossible to have the lien removed. This means once you sell your home, the credit card company would be entitled to collect the amount of the judgment prior to your receiving any cash from the sale.

Credit card companies typically only seek judgments only after several attempts to collect a debt. If you have received a notification informing you that a credit card debt company is suing you, do not ignore the notice. Contact an attorney who works only in bankruptcy for assistance. It may be beneficial for you to file bankruptcy before the creditor is granted a judgment.

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