Yikes! I have a Judgment on My Credit Report!!

A judgment is a decision by a court describing the outcome of a lawsuit. Any amounts owed will be described in the judgment. With a judgment the creditor often has the ability to go after wages, bank accounts or other property to collect the judgment, depending on state law.

How to Find If You Have a Judgment Against You

In most cases, when a creditor gets a judgment against a consumer it will be reported on the consumer’s credit reports. That’s because court judgments are a matter of “public record” — information available to the public through the courts. That information, like bankruptcy or foreclosure data, is collected by companies that provide it to the credit reporting agencies.

Your first line of defense, then, is to check your credit reports. At a minimum, order your free credit reports once a year at  AnnualCreditReport.com  Judgments will typically be listed under the section describing negative items on your report.  If a judgment does appear, you will want to know as soon as possible, for several reasons, not the least of which is that your score will likely drop significantly.

Ok, so you do indeed have a judgment….now what do you do?  You generally have three options.

1. Fight it.

Before a creditor gets a judgment against you, it must typically serve you with the summons and complaint. The procedure varies by state and by court.  If a person hadn’t been properly served and knows the legal process, then they can type up a motion to vacate a judgment or a motion to set aside a judgment.   Then there will be a hearing,  But even if the judgment is successfully set aside or vacated, it may not be the last the debtor hears about the matter. It may start all over again.  My advice is to seek an attorney and let them advise you on how to best fight it.

2. Pay if off or settle it.

If your financial circumstances have changed since the time you fell behind on the debt, you may now be able to pay the judgment, either in full or for less than you owe as part of a negotiated settlement. Make sure the creditor files a “Satisfaction of Judgment” with the court indicating that it has been paid. When you pay in full, they are required to do so within a specific time period, so don’t be afraid to push for that.

If you negotiate a settlement, ask the creditor or collection agency to agree to file a satisfaction of judgment when you pay the agreed upon amount.  Make sure you get everything documented! Often,  it’s not always followed through on. If the court records haven’t been updated within 60 days or so, you may have to file your own motion with the court.

Paid judgments can be reported for seven years from the date that they were entered by the court, while unpaid judgments can be reported until the statute of limitations has expired — a much longer time period in most cases. That means that if the judgment is more than 7 years old then paying it should result in it being removed from your credit reports. It may take a little while, though, for the court and credit reporting agencies records to be updated. You should expect results within no later than 60 days after you have paid it.

3. Wipe it out in bankruptcy.

If there is simply no way you can pay the judgment and you don’t want it hanging over your head indefinitely, find out whether you can discharge some or all of it (erase it) by filing for bankruptcy. Most court judgments can be included in bankruptcy.

Whatever you do, don’t ignore a judgment. In most states, judgment creditors have 10 years or more to collect, and can renew judgments that remain unpaid for another decade — or longer. And that means at any time you may find your bank account or wages at risk (again, depending on state law).

To avoid an unpleasant — and potentially expensive — surprise, find out if there is a judgment against you. If there is, find a way to put it behind you.

 

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About jenniferhamby

Jennifer Hamby, Executive Vice President of My Credit My Future, has worked in the financial sector since 1996. She is dedicated to educating consumers on financial education and responsibility. Having worked in Data Facts’ Nashville office since 2007 as an account executive, Hamby realized the need for financial education that was informative, yet easy to understand and attainable. Partnering with both Junior Achievement, and Tennessee Jump$tart, in providing financial education, opened her eyes to the tremendous benefits in providing financial literacy and resources for consumers to aid in making better financial decisions.
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