 Search the Knowledgebase |
 Browse by Category |
|
|
|
|
|
| What is a judgment? |
|
Article Details
Last Updated
13th of April, 2010
|
| User Opinions (3 votes) |
66%
33%
|
|
Thank you for rating this answer.
|
A judgment is a decision from a judge on a civil action or lawsuit, usually containing an amount of money a person is required to pay to satisfy a debt or as a penalty. Judgment records remain on your credit report for at least seven years (longer if they remain unpaid) and harm your credit score significantly.
If a lawsuit (due to credit card debt, etc.) results in a judgment against you, there is a time limit for collecting that judgment. However, many states allow judgments to be renewed one or more times, which extends their enforceability. This means you risk a permanent legal obligation until the judgement is satisfied. Like most kinds of debt, judgments can often be settled for less than the full balance.
Also keep in mind that a judgment often gives the creditor additional collection remedies. For example, depending on your state's laws, they may be able to place a lien against your property, garnish your wages, and/or seize funds from your bank account (known as a bank levy).
Deficiency Judgment
If you default on a secured loan, such as a car or home, your property may be sold and the lender may try to obtain a deficiency judgment against you for the difference between what you owed (plus collection costs and legal fees, if allowed by state law) and the amount they received from the sale. Some state laws prohibit deficiency judgements for certain types of loans.
You as a mortgagor may be required by law to pay mortgage insurance (PMI) for the length of time the mortgagor's first mortgage is more than 80 percent of the value of the property. In a real estate market where housing prices drop, it is possible that the property could be sold for less than the balance on the loan. PMI will not cover this deficit, so a lender may ask the court to enter a deficiency judgment against you. A deficiency judgment gives the lender the right to collect the difference from your other assets unless the loan is considered a non-recourse loan.
Not sure how to handle your debt? Find out about free debt help and services.
|
The article has been updated successfully.
