A judgment is a decision made by a court that’s been entered into the public record (i.e., you can see it on court records available to the public). Judgments are the result of a legal action or lawsuit.
Judgments start with a lawsuit and generally end with someone owing someone else something.
Someone files a lawsuit.
The party being sued has a chance to respond.
The parties may exchange documents or
try to negotiate.
If they can’t reach a settlement,
the dispute goes to trial.
A judge or jury makes a decision in the case.
The court enters a judgment in the public record.
The judgment could require the losing party to pay the winner—either with money or a service. For example, a judge might order a building contractor to complete a project rather than paying the homeowner.
If a judgment has been entered against you, it can give debt collectors extra tools to try to force you to pay. These might include:
States have their own laws governing how much of your money a debt collector can take or which property it can seize. This is meant to ensure you can maintain at least a basic standard of living.
Judgments related to debt repayment can’t be added to your credit report (they used to get added, but recent policy changes have changed this).
But bankruptcy, which is one way people resolve judgments, will show up on your credit report (and stick around for as long as ten years) as will unpaid account balances (which typically disappear after seven years). Both can lower your credit score.
Your best bet is always to pay the debts you owe. However, if you’re facing a judgment, keep in mind that:
A judgment is a decision made by a court in response to a lawsuit. A judgment might require you to pay another person or complete a service. Judgments are legally enforceable and give debt collectors tools—including property liens and wage garnishment—to make sure you pay the debt.