Once a judgment is granted by the court, a creditor has the right to collect the money via wage garnishment, tax return garnishments or garnishing your bank account. Each state has specific laws governing how long a judgment is good for and how much interest can be charged. Once the statute of limitations on judgments time frame has passed, the judgment is no longer legally collectible.
What is a Judgment
When a consumer defaults on a loan, the creditor is entitled to seek legal action to recover the money lost. The creditor must inform the consumer of the legal action including the pending court date. The creditor must attend the court hearing and the consumer may attend. The creditor must prove that the account holder defaulted on the account and is in breach of contract. If the creditor does not attend the court hearing, the judgment is almost always granted by default. Once the grant the judgment, the creditor can pursue legal remedies to collect on the debt. A judgment in Idaho, as well as all 50 states, cannot be granted without court approval.
What is a Statute of Limitation
A statute of limitation is a legal limit placed on how long a creditor can pursue legal action to collect on a debt. In Idaho, the statute of limitations varies by the type of debt. A creditor can take legal action and attempt to get a judgment even if the statute of limitation on debt has passed unless the creditor is aware of his rights and appears in court to tell the judge that the statute of limitation has passed. The judge will dismiss the case in this event, but if the creditor fails to point out the statute of limitations, the judge is likely to grant the judgment.
Idaho Statute of Limitations
Each state establishes the statute of limitations on debt based on the type of debt. In Idaho, the limts are: Open account: This is an account with a changing balance such as a credit card. Four years from date of default. Written contract: A loan that requires you and the creditor to sign a document such as a car loan. Five years from date of default. Oral contract: An oral agreement between you and another person. Four years from date of default. Domestic judgment: A judgment granted by the court. Five years but is renewable up to 20 years total. A judgment is only good for five years once it is granted but it can be renewed every five years for a maximum of 20 years. To renew the judgment, a creditor must petition the court before the five years expires.
Judgments and Credit Reports
A judgment can remain on a credit report for seven years. Even if the judgment is renewed, it will not appear on your credit report after the initial seven-year period. The judgment will, therefore, not affect your credit score after the initial seven years has passed.
Living in Denver, Lynndee Marooney has been writing finance and credit-related articles, guides, manuals and e-books for private companies since 1995. She holds a Bachelor of Arts in journalism and a Bachelor of Science in finance from the University of Maryland. She enjoys counseling clients who are experiencing financial difficulties.