How long does a creditor have to collect a judgment?

Recently on our bankruptcy forum a user asked, “In 2010 I was sued by a debt collector. They did nothing in the courts for years. Today I received notice they are finally moving toward a summary judgement against me. The statute of limitations does not help because they sued me well with my state’s four-year limit. What recourse do I have? How is this 6 year delay not a form of harassment?” 

What is a judgment?

Debt collectors may attempt to collect debt in a variety of ways before they are forced to sue you in court. In fact, before filing claim against you they are likely to make numerous harassing phone calls and send multiple notifications. If all that fails, however, creditors may decide to take you to court.

If you fail to appear in court or the court finds in favor of the creditor, the court will issue a judgment, which is simply a legal verdict which outlines your obligation to repay the creditor.

Statute of limitations for collecting a judgment

All states have a specific amount of time in which debt collectors can attempt to collect debts and file a lawsuit in court against you. If the debt collector sues you and wins a judgment against you there is also a specific amount of time to collect the judgment. Unfortunately, most states also allow judgments to be renewed one or more times, which can potentially result in what might be a permanent legal obligation to repay the debt. 

For example, the state of Alabama allows creditors 20 years to collect their judgments. Arkansas, Arizona, and California all allows creditors 10 years to collect their judgments. And if that’s not bad enough, many states also allow interest to be charged on the judgment, as well as attorney’s fees and court costs.

How is this not harassment?

Now, you asked if the six year wait to collect the judgment was considered harassment. Clearly, under state law, the answer is no. As mentioned above, it’s likely your creditor could have waited even longer if they’d wished.

How will the judgment be enforced?

Creditors have various means or actions they can take to pursue judgment; actions which vary by state. In fact, state laws will specifically outline what creditors can do to enforce a judgment.

For example, some states will allow a creditor to levy your bank accounts, repossess property, and maybe even garnish your wages. Other states, however, exempt certain types of property from repossession and only allow wage garnishments for certain types of judgments, such as tax debt owed or child support.

Without more information about your state and the type of debt owed it’s impossible to say for sure how much power and what resources your creditor will have to enforce the judgment.

Options after a judgment has been issued

Although it’s generally best to try to negotiate a settlement with the creditor before the debt is taken to court and a judgment is issued, some creditors may be willing to accept some type of settlement offer after the judgment is issued, especially if you have no wages to garnish or assets to repossess.

If you do decide to negotiate with your creditor, however, it’s important to get the agreement in writing and make sure the agreement clearly states that you will not owe any money after the settlement.

Bottom Line:

Just because you have not heard from a debt collector for a few years this does not mean that a judgment is going away. Many states allow creditors years to continue to try to collect the debt. Additionally, if you do have an unpaid judgment against you this can eliminate your ability to purchase a home or qualify for a low interest rate on a loan.