Credit Card Debt Judgment
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Credit Card Debt Judgment

A credit card debt judgment is a court ruling involving debt. In other words, if a creditor gets a judgment against a credit card user who has unpaid debt, the debtor is legally obligated to pay the debt in the amount indicated by the judgment.

Types of Credit Card Debt Judgments

A credit card debt judgment can work one of two ways:

  • Ruling in favor of the creditor: In this instance, the court rules that the creditor (that is, the credit card issuer) has a legal right to collect money from the debtor (that is, the credit card user). When a court rules in favor of a creditor, it issues an order for the debtor to pay a specific amount of money by a given date (often the card balance plus interest, penalties and fees).
  • Ruling in favor of the debtor: In this instance, the court finds that the debtor has no legal obligation to pay its creditor. After a ruling in favor of a debtor, a creditor can no longer attempt to collect on the debt.

How Do Credit Card Debt Judgments Work?

Most credit card agreements come with what's called an "arbitration clause," a legal nugget that prohibits consumers from suing credit card companies over any disputes. Instead, disputes must go to arbitration, which works like this:

  • Complaint submission: In most cases, the credit card issuer submits a complaint against a debtor, usually for not paying debts sufficiently.
  • Notification of parties: The arbitration court sends notification of arbitration to the consumer by mail. If the consumer does not respond, the arbitration goes ahead with input only from the creditor.
  • Ruling: Studies have found that arbitration rulings favor creditors in more than 95 percent of cases, which has led some consumer advocates to question the fairness of credit card arbitration. The ruling that is handed down by the court is a credit card debt judgment.

So what can a person facing a credit card debt judgment do? If the facts of the case indicate that the person is legally responsible for paying the debt, many individuals turn to the bankruptcy court for protection.

Not only is bankruptcy designed to wipe out unsecured debts such as credit cards, filing bankruptcy comes with a protection called the automatic stay that immediately halts all collection efforts by creditors, including lawsuits and judgment orders.

If you're interested in learning more about your legal options for dealing with debt judgments and/or seeking bankruptcy protection , don’t hesitate to connect with a bankruptcy lawyer for a free consultation. Simply fill out the quick case review form on this page to get started now.

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