April 06, 2021
Summary: What is a consent judgment and how can it help you get out of debt? Learn about the different kinds of judgments and why a consent judgment might get you out of trouble.
When a debt collector is unsuccessful in securing repayment for the outstanding balance on an account, they routinely decide to escalate the matter to litigation by filing a debt collection lawsuit. If the debt collector prevails in the lawsuit, a judgment will likely be entered against you. This judgment will then empower the debt collector to gain access to your bank account, along with seizing certain financial and personal assets.
There are different types of judgments that can be entered in a debt collection lawsuit, including a “consent judgment.” This page provides valuable information on what to expect if, or when, a debt collector decides to file a lawsuit in pursuit of repayment on an allegedly-delinquent account.
As a general matter, a judgment is considered to be an official order entered by a court. The judgment is deemed to be the decision of the court, based upon the facts and evidence presented by both pirates involved in the litigation.
When a judgment is entered in a debt collection lawsuit, it empowers the creditor (oftentimes a debt collection agency) to use advanced collection techniques to recover the outstanding balance owed on a delinquent account. For example, if a debt collection agency like Asset Acceptance LLC or Cavalry SPV I LLC, establishes in court that you owe $8,000 on a delinquent credit card account, the court hearing the case could very well enter a judgment against you that declares you owe them the $8,000, in addition to related costs, interest and legal fees.
There are various avenues for securing a judgment. Most people are familiar with the concept of judgment via trial. This is the forum of litigation most often glamorized on television through programs like Boston Legal and Ally McBeal. In the context of a debt collection lawsuit, when a collection agency goes to trial against you, they are hoping to secure a judgment from the court after a presentation of evidence and making arguments at a trial.
In addition to a court-entered judgment via a trial, there is the potential for judgment to be entered through a pre-trial motion. In many instances, this is accomplished through a Motion for Summary Judgment. A summary judgment motion can be entered by either party (meaning you could file this type of motion as well if there is an indication that the debt collection agency lacks sufficient evidence to prevail at trial). At its core, a motion for summary judgment is an argument focused on trying to convince the judge that no material facts are in dispute and, as a result, judgment should be entered without having to proceed to a trial. for example, that you signed a legal loan agreement, made no payments, and have no defense as to why you're not paying. The creditor also must convince the judge that it is entitled to judgment as a matter of law. If the judge agrees with the creditor, the judge can enter a judgment against you without any trial taking place. The creditor should not win if there are any material (important) facts in dispute (for example, if you claim you didn't sign the agreement).
This is generally considered to be the most common type of judgment entered in debt collection lawsuits. It can be obtained when a defendant (i.e. you) fails to file an answer to the debt collector's complaint within the stated filing period.
It is important to understand that ignoring the debt collector's lawsuit is never a good idea. Once a default judgment is entered, the debt collector will have the legal ability to seize various assets and even seek to garnish your wages.
When a debt collection lawsuit is filed, it does not mean that the parties stop negotiating. It is quite common for debt collection cases to be resolved after a lawsuit is filed but before the commencement of an actual trial. If you can reach an amicable agreement with the debt collector on a settlement after a lawsuit has been filed, you may need to agree to a “consent judgment.”
This is basically where you and the debt collector file a notice with the court that an amicable agreement has been reached to resolve the lawsuit. Both you and the debt collector will need to sign the consent judgment and file it with the court to be reviewed and approved by the judge. Please keep in mind that the consent judgment is not official unless and until it is filed and signed by the judge.
The decision on whether to agree to a consent judgment is extremely important and could have significant ramifications on your financial future. For example, let's say you agree to a consent judgment whereby you agree to pay the creditor a portion of what is owed, but not the full amount. The settlement is agreed upon, but the creditor then asks you to sign a consent judgment to resolve the active collection lawsuit. If you agree to the consent judgment, you are effectively requesting that the judge presiding over the case to enter a judgment against you.
This is extremely risky since the adverse judgment against you could be reported to the three major credit bureaus and it could potentially torpedo your credit score. Some debt collectors try to circumvent this issue by assuring you that they will not report the judgment or inform the credit bureaus. That is nice, but it does not matter. Why? Because the major credit bureaus do not obtain adverse judgment data from collection agencies. Instead, they review the judgments entered by courts across the country. As a result, if a credit bureau discovers an adverse judgment against you, even if it was based on a mutually-agreed consent judgment, the credit bureau will add it to your credit report.
Here is a summary of key points concerning consent judgments in the context of debt collection lawsuits:
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
Here's a list of guides for other states.
Being sued by a different debt collector? We're making guides on how to beat each one.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.