Consumer debt can lead to legal action, resulting in a judgment against you. Although you may legally owe a debt, each state has specific laws that govern just how long you are legally responsible for payment of that debt. Such laws are called statutes of limitations. If you have debt in Pennsylvania, it's prudent to become familiar with the statute of limitations on judgments in that state.
A judgment is issued by the court, usually at the conclusion of a civil trial. It specifies how much the defendant owes the plaintiff, often a creditor. Once issued, the creditor has up to four years in the state of Pennsylvania to collect on that judgment. With a judgment, the creditor may be able to garnish part of your wages, seize money in your bank accounts or place a lien on property that you may own.
The statute of limitations on judgments can affect you not only today but well into the future. If you are judgment proof at the time the judgment is entered, which means you do not own any assets, the creditor may not be able to collect from you. Still, if you obtain any assets within the four year statute of limitation period, the creditor can seek to seize those assets to pay for the judgment. The four year clock begins from the date the court issued the judgment.
A judgment can impact your financial life in more than one way. Not only does it potentially allow for the seizure of your property and bank accounts, but it will also appear on your credit report. A judgment is a public record and can remain on your credit report for up to seven years. It is a derogatory item and will have a negative impact on your FICO credit score. How much your score suffers will depend upon the other factors present within your credit report.
If a creditor receives a judgment against you, that creditor may decide to either hire a collection agency to collect on that debt or sell the debt to the agency. In either event, under the Fair Credit Reporting Act, the collection agency can place a collection account on your credit report. Lenders who pull your credit will see the collections on the report. Collection accounts are considered negative items and will stay on your credit report for up to seven years.
- Merriam- Webster: Judgment
- US Legal: Judgment Proof Law and Legal Definition
- MyFICO: What's In Your FICO Score
- Equifax: Who Can See My Equifax Credit Report
- Consumer Financial Protection Bureau. "What Is a Judgment?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "What Is a Statue of Limitations On a Debt?" Accessed March 16, 2020.
- Texas Law Help. "What Is an Affirmative Defense?" Accessed March 16, 2020.
- Federal Trade Commission. "Time-Barred Debts." Accessed March 16, 2020.
- The Florida Bar. "The Life of a Money Judgment in Florida Is Limited for Only Some Purposes." Accessed March 16, 2020.
- Virginia Law. "§ 8.01-251 Limitations on Enforcement of Judgments." Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "How Long Does Negative Information Remain on My Credit Report?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "What Is a Garnishment?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "Can a Debt Collector Take My Social Security or VA Benefits?" Accessed March 16, 2020.
- County of Napa. "Real Property Levy - Writ of Execution." Accessed March 16, 2020.
- U.S. Marshals Service. "Service of Process: Writ of Execution." Accessed March 16, 2020.
- National Association of REALTORS®. "What Is a Property Lien? An Unpaid Debt That Could Trip Up Your Home Sale." Accessed March 16, 2020.
Mack Mitzsheva is a tax lawyer, personal finance expert and the author of the forthcoming ebook, "10 Best Places to Work Online." Mitzsheva is also a social media entrepreneur with five successful sites under her belt. Always innovative, Mitzsheva is currently developing a cutting-edge budgeting app for newlyweds.