So, take me to court then!

What happens to your credit if you are sued by someone and they win? Do lenders know? Does it matter?

If you are sued, and the other party wins, a money judgment will be entered in their favor. This judgment is a public record and therefore can and probably will become public knowledge. Anyone that wants to know can go to the county office (the county in which you reside) and search your name against the public records. This record will remain 'active' for 10 years unless it is renewed. If it is renewed, it will remain active for another 10 years. However, it can be renewed only once.

This judgment will likely appear on your credit report, and if you own real estate, it will become a lien against the real estate. When a lender looks at your credit report and observes this judgment record, it is likely they will want an explanation at best, at worst they will deny your loan request without any questions asked. Of course, they will take into consideration a number of things like how old the judgment is and whether or not you've been sued successfully by anyone else and whether or not there are any other collection items reporting on your credit file.

Because this is a public record, if it is picked up on your credit report, it will have an adverse effect on your credit score. Public records of any kind will drag your credit score down. This will impair your ability to get credit with reasonable terms, if at all.

If a creditor (or anyone else for that matter) receives a money judgment against you, they can move to garnish your wages and assets. If they are able to track down your bank accounts, their attorney can lawfully demand that the deposit institution relinquish your money, and the deposit institution is required to do so.

If you're an employee and your income is above a certain level, the judgment creditor can garnish your wages by turning the matter over to the county sheriff. If you're self employed, the sheriff can seize your cash register, or seize payment(s) from your customers.

Does any of this matter? To the creditor, absolutely! To the judgment debtor? Depends I guess! If they don't have a job or any assets, and their credit history is already bad, then I guess it wouldn't really matter too much. But if the person is of good credit character, they might look for another way to resolve the matter to avoid the judgment.

If someone owes you money, a money judgment might be able to help you. Remember, you can't get blood from a stone, and it's no fun trying. It's a waste of time; impossible! Don't waste your time and resources, and don't throw good money after bad trying to get blood from a stone. Depending upon how much you're suing for, the court might require that you hire an attorney to represent you. Check with your local court to find out the maximum amount that you can bring a lawsuit for in small claims court.