The Top 10 Myths Regarding Legal Judgments

By Leonard R Gendelberg

The top 10 myths about legal judgments

Legal judgments can range from black marks on your credit score to wage garnishment, frozen bank accounts, levies against personal property, and a host of other negativity. Whatever form a judgment takes against you, it's a frightening and confusing experience.

Even so, some of the most common perceptions simply aren't true. Read on for a few of the biggest myths regarding legal judgments.

1. If a debt is "charged off," you no longer have to pay it.

This is not true. When a company charges off a debt, it's not a decision to dismiss or forgive the debt. Typically, companies will sell bundles of negative accounts to collection agencies, which simply transfers your debt to another party. You'll now owe the collection agency rather than the original company, and your credit score will suffer. Therefore, despite it being a "charge off", the debt is still owed, and can possibly turn into a judgment if the charged off account is not resolved.

2. Paying a judgment either in full or by making payment arrangements, will fix your credit.

Once a judgment has been filed against you, it remains listed on your credit report for 10 - 20 years. Once a judgment has been paid in full or settled for a lower amount, it will be listed as "paid", however, the judgment will still be listed on your credit report. This affects your credit score. The only true way of raising your credit score is by having the judgment completely removed from your credit report.

3. You can demand that a creditor cease collection attempts, and they have to comply.

Unfortunately, you cannot mandate that a creditor cease collection attempts because if you truly owe the debt, they are entitled to attempt to collect it, however, you can infact prevent the creditor from contacting you by phone or mail regarding the debt. This is accomplished by simply mailing them a Cease and Desist letter.

4. Debt collectors will stop bothering you if you make a payment.

Well yes, once you pay, they will infact stop bothering you and it is not being advocated to refrain from making any payments to a debt collector, however, keep in mind that before making any form of a payment, you must first attempt to get the debt amount reduced as much as possible and to get the agreement in writing.

5. If you make a payment on old debt, you can't be sued.

This is not only false, but if you pay on an account that has been inactive for a long time, you may restart an expired statute of limitations and make it possible for a collection agency to sue you, when they couldn't sue you previously. For example, let's say you incurred a debt from January 2000 and the Statute of Limitations expired on January 2006, but several days before January 2006 you told the creditor by mail or by phone "I will pay the debt but I want to pay less". This means that you acknowledged the debt and a fresh new 6 year Statute of Limitations period will start anew from the date that you made that statement.

6. No one can take money out of your paycheck without your permission.

Yes, they can take the money out of your account without your permission, as long as they have a court order.

7. Once you receive a notice for a wage garnishment or account freeze, there's nothing you can do.

There are plenty of things that you can do to prevent the garnishment. You need to speak with an experienced consumer attorney that will advise you regarding your rights. Although filing for bankruptcy is not always recommended, this is just one of the ways that a garnishment can be avoided.

8. If your property has been seized or repossessed, you don't owe any more money.

While there are a few exceptions, in most cases of property seizure, you'll still owe the difference between your original debt and the price the creditor obtained through the sale of the property. For example, if your debt was in the sum of $100,000 but your house was sold for $70,000 at a public auction, you may still be liable for $30,000 in addition to the loss of your house. However, each state has its own stringent laws and a consumer attorney should be contacted to discuss this in greater detail.

9. Bankruptcy will solve all your problems.

In addition to negatively impacting your credit for approximately 10 years, there are some judgments that can't even be included in a bankruptcy filing. It is recommended that a bankruptcy should not be filed unless it's an absolutely last resort after you have exhausted all of your other options.

10. If you ignore a judgment, it will eventually go away.

Well yes, the judgment will truly eventually go away one day but the problem is that will take many years. Most judgments stay on your credit report for over 10 years, and then the creditor has the right to extend the judgment by another 10 years. Then the credit bureaus are allowed to report negative information for 6 - 10 years (depending on the type of the account). Therefore, all in all, yes, the judgment will eventually disappear but it will take many years.

What to do

Legal judgments comprise a complex field and its practically impossible to discuss these myths in greater detail without writing an entire book. However, it is important for you to at least understand the basics and to speak with a consumer attorney regarding your specific needs, your states laws, and how your credit can get back on track.

Legal judgments can range from black marks on your credit score to wage garnishment, frozen bank accounts, levies against personal property, and a host of other negativity. Whatever form a judgment takes against you, it's a frightening and confusing experience. Even so, some of the most common perceptions simply aren't true. Read on for a few of the biggest myths regarding legal judgments.

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