Debt which is sent to collections will adversely affect your credit score. However, if your creditor seeks and is awarded a judgment, your credit score will be affected even more drastically.
If you are served with a Notice to Appear in court with regard to an unpaid debt, your creditor is through trying to work with you to collect the debt. After receipt of the Notice, you will have 30 days to object to the filing. If you can prove that the debt is invalid, you can have the case dismissed.
Some creditors may threaten to file a law suit but are not serious. However, going to court will be the kiss of death for your credit score and, therefore, should be avoided at all costs.
A credit report which lists an “unpaid” judgment will continue to show that unpaid judgment for 10-12 years. A renewal of this listing may occur if, at the end of this period, the judgment remains unpaid. Your credit report will list a paid judgment for up to 7 years from the date paid.
Assuming you owe the debt, the debt is still within the statute of limitations (check your state’s statute of limitations laws), and you would prefer to negotiate the outcome instead of going to court, you should make an attempt to contact your creditor. Prior to doing this, you should check your state’s statute of limitations laws because, if the debt is beyond the law, making an offer to pay could begin the clock ticking again and eliminate any statute of limitations claim you may have had.
If you are ordered by the court to pay a debt and an official court order is issued, the impact on your credit score will be devastating. However, if you decide to contact your creditor and arrange for payment, you may be able to avoid this traumatic black mark.
Offering to negotiate a settlement is the best solution for all parties. Typically, creditors do not want to go to court and will accept a portion of the amount owed just to bring the matter to a close. If you do not have a lump sum to offer as payment, you can always attempt to negotiate a payment plan. If your creditor is not “in the mood” to consider any offers, you might think about calling the lawyer handling the case for your creditor.
If a judgment is dismissed, it will be reported on your credit report as “legally void.” This is considerably less harmful than a “paid” judgment. Paid judgments remain for seven years on your credit report from the time paid.
In addition to a settlement, you should attempt to negotiate a deletion of the negative information in its entirety from your credit report. If you are able to accomplish this, it is imperative that you obtain the agreement in writing and obtain both parties’ signatures. It is good to remember that negotiating opportunites all but vanish once the court becomes involved.
It would be smart to consider seeking out the advice of a seasoned consumer credit attorney. The typical consumer credit attorney has handled hundreds, if not thousands, of these types of cases and can benefit you with his experience and knowledge.
How I Stopped Midland Credit. I Erased a $14,072 Midland Credit Debt and Fixed my Bad Credit. www.MidlandCreditDebt.com
