Court Ordered Judgement

[ios1000]

I have a court ordered judgement from Discover Card that dates back to 2002. We agreed in court that I would pay $40 a month on a $6000 debt. My original bal was about $3700 before all the late charges and interest charges but I digress, so anyways I have paid every month for over 8 years, never missing a payment. My balance today is over 8k because the legal loan sharks that they are charge over 20% interest so my paltry $480 a year doesn't even cover the interest. The judgement has been removed my credit report because it's past 7 years, we just got our first mortgage last Oct, and didn't run into any problems, no one mentioned it,, my score is about 780. My question...what happens if I stop paying this $40 a month? Will they drag me back into court ? Then be on my credit report for another 7 yrs? Will they demand MORE money a month? The $40 a month doesn't kill me, kind of just accepted the fact that I will be paying that forever. But it does kinda suck.

Any advice would be greatly appreciated

ios

[guiness56]

What state are you in?  Is the same state that you were sued in?

[ios1000]

Massachusetts, and yes, same state.

[Anonymous]

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@ios1000 wrote:

I have a court ordered judgement from Discover Card that dates back to 2002. We agreed in court that I would pay $40 a month on a $6000 debt. My original bal was about $3700 before all the late charges and interest charges but I digress, so anyways I have paid every month for over 8 years, never missing a payment. My balance today is over 8k because the legal loan sharks that they are charge over 20% interest so my paltry $480 a year doesn't even cover the interest. The judgement has been removed my credit report because it's past 7 years, we just got our first mortgage last Oct, and didn't run into any problems, no one mentioned it,, my score is about 780. My question...what happens if I stop paying this $40 a month? Will they drag me back into court ? Then be on my credit report for another 7 yrs? Will they demand MORE money a month? The $40 a month doesn't kill me, kind of just accepted the fact that I will be paying that forever. But it does kinda suck.

Any advice would be greatly appreciated

ios

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Did they obtain a judgment against you or did the court withhold judgment pending completion of the payment plan?

If there is a judgment, the maximum APR that the judgment creditor can tack on is 10%.  Upon default, they would not have to go back into court and they can simply attempt to execute against your assets.  The good news, though, is that they cannot put the judgment back on your credit reports. 

If they have no judgment -- too include a confession of judgment -- they will be hard pressed to obtain one now at this late state of the game.  The SOL in Mass. on credit card debt is 6 years.  To be able to get around that, they'd have to show that your agreement was, basically, a new extension of credit.

Even at 10%, your $40 per month payment does not even cover interest.  You'll be paying this debt your whole life ... and even then. 

[ios1000]

Thanks for the great legal advice O6, I will have to look at the paperwork when I get home to see if there was a judgement or not. As far as the court day went, before my name was called the lawyer for the CA asked me what I could afford a month and I told him $40, so when court called my name he said that we had made an agreement for me to pay the $40 a month and it was acceptable to them, the judge asked me if that was okay and told me to pay it every first of the month. That was it, when I left I had a address and a Case Number written on a piece of scrap paper. I do recall about 4 years ago when I was going through a  pre approved for a mortgage the bank asked about it because it was on my credit report then, I told her the details and she said I needed to go to the courthouse and get a copy of the agreement/judgement, which I did and have it home. It's one page that says I will pay $40 a month.  I'll let you know. As for the interest, After paying for about a year I called these sharks and said to them that I wanted a statement or a record of my payments every quarter and they just laughed and said they don't need and won't do that but while I was on the phone they suggested to me that I pay more than the $40 because that doesn't even cover the interest, I said "what interest"? and they said by law they can charge up to 20% interest, which they do. I was so PO I vowed never to send them a penny over $40 and to this day I have not. Once a year they send me an offer to generously accept 30% of the balance, sometimes it's 50%, but with all the interest the 50% discounted balance is higher than when they took me to court.

[Anonymous]

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@ios1000 wrote:

Thanks for the great legal advice O6, I will have to look at the paperwork when I get home to see if there was a judgement or not. As far as the court day went, before my name was called the lawyer for the CA asked me what I could afford a month and I told him $40, so when court called my name he said that we had made an agreement for me to pay the $40 a month and it was acceptable to them, the judge asked me if that was okay and told me to pay it every first of the month. That was it, when I left I had a address and a Case Number written on a piece of scrap paper. I do recall about 4 years ago when I was going through a  pre approved for a mortgage the bank asked about it because it was on my credit report then, I told her the details and she said I needed to go to the courthouse and get a copy of the agreement/judgement, which I did and have it home. It's one page that says I will pay $40 a month.  I'll let you know. As for the interest, After paying for about a year I called these sharks and said to them that I wanted a statement or a record of my payments every quarter and they just laughed and said they don't need and won't do that but while I was on the phone they suggested to me that I pay more than the $40 because that doesn't even cover the interest, I said "what interest"? and they said by law they can charge up to 20% interest, which they do. I was so PO I vowed never to send them a penny over $40 and to this day I have not. Once a year they send me an offer to generously accept 30% of the balance, sometimes it's 50%, but with all the interest the 50% discounted balance is higher than when they took me to court.

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It sounds like there was an actual judgment rendered since you mentioned it appeared on your credit report.  Unfortunately judgments in MA can live for 20 years, so if you just stop paying they could probably attach wages or execute / place a lien against any property or bank accounts that you own.  They cannot, however, usually relist the debt / judgment back on your credit report.

Currently statutory interest on judgments in MA is at 10%.  It may have been higher way back when, but even at 10% the $40 you pay each month doesn't even cover the interest.  You'd have to check your state's civil procedure law to see if there is an interest rate change whether it applies to existing judgments.  Usually it will.

Personally, I'd try to get the whole monkey off your back.  If they have offered you in the past to settle for 30%, there's a decent chance they'd jump at even 20% or 25%.  You'd have to decide if it is worth it financially and emotionally.  Otherwise you're going to end up paying them another $5760 over the next 12 years.  At the 20 year mark you can pretty much tell them to FOAD and stop paying them since judgments only have a 20-year shelf life in MA.

[ios1000]

Once again, great advice O6 and I thank you. Unfortunatley it wasn't a 30% OF the balance, it was 30% OFF the balance. The best offer was 50% about 3 years ago. For now i'll keep paying the $40, I don't need any leins or attachments on my pay. I have it set up with my bank to auto pay, so I don't have to do anything except have the $40 in my account which usually isn't a problem But I will look into the interest thing, maybe I am mistaken, that was 7 years ago and on a phone call. That's why it's always good to get things in writing. I do alot of work for General Electric Aircraft Engines and their motto is: IF IT'S NOT IN WRITING, IT DIDN'T HAPPEN.  Once again, thanks for the invaluable info, it is really appreciated.

ios

[Anonymous]

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@ios1000 wrote:

Once again, great advice O6 and I thank you. Unfortunatley it wasn't a 30% OF the balance, it was 30% OFF the balance. The best offer was 50% about 3 years ago. For now i'll keep paying the $40, I don't need any leins or attachments on my pay. I have it set up with my bank to auto pay, so I don't have to do anything except have the $40 in my account which usually isn't a problem But I will look into the interest thing, maybe I am mistaken, that was 7 years ago and on a phone call. That's why it's always good to get things in writing. I do alot of work for General Electric Aircraft Engines and their motto is: IF IT'S NOT IN WRITING, IT DIDN'T HAPPEN.  Once again, thanks for the invaluable info, it is really appreciated.

ios

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30% off sucks.  So does 50%.

Why not write them and make them an offer of, say, $1,000?  If they don't bite, continue with the $40.  The good news is that after a few more years $40 will be worth really only $25. 

[happy0510]

ios,

This sucks real real bad and I feel for you! Back when I first got my judgment I was making payments, then stopped.  When I made my most recent arrangements the lady said there is no interest charged while I am under a payment plan.  I was like whaaaaaaat? The stupid first guy never told me that otherwise I would have ate bread and water till I got this over with.  I'm in CA.  You should definitely look into this further.  Don't let these A-holes get away with this crap.

Happy

[Anonymous]

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@happy0510 wrote:

ios,

This sucks real real bad and I feel for you! Back when I first got my judgment I was making payments, then stopped.  When I made my most recent arrangements the lady said there is no interest charged while I am under a payment plan.  I was like whaaaaaaat? The stupid first guy never told me that otherwise I would have ate bread and water till I got this over with.  I'm in CA.  You should definitely look into this further.  Don't let these A-holes get away with this crap.

Happy

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Yes, this is something to look into!