Managing Debt

Help! I Found a Judgment on My Credit Report

Comments 32 Comments

It’s scary enough to owe money you can’t pay back, but what may be even worse is finding out that you have already been sued for a debt, but didn’t even know it. Mark wrote on the Credit.com blog:

I received a letter stating there was a judgment against me from 9-13-2006 and they’re trying to get a wage verification from my employer, so they can garnish my wages. This is seven years old and I don’t ever remember being made aware of this. What can I do?

Another reader, Leslie, asked about a judgment she knew nothing about:

I live in Texas and just recently divorced, Nov 2012. I had no income for the past 17 years. I just discovered a judgment has been made against me for a loan at a credit union. I was the primary account holder of the checking account and had to be put on the loan in order for my husband to get it. I was never served anything for this judgment and had no idea it was on there until I had to refinance my home after the divorce. Do I have any recourse for this or do I just need to bite the bullet and work something out with them?

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 from all three credit reporting bureaus once each year. Judgments will typically be listed under the section describing negative items on your report.

In addition, though, it’s smart to monitor your credit score each month which you can do for free through a service such as Credit.com’s free Credit Report Card. 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.

Your Options

What if you check your credit reports and find there is a judgment against you? 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, explains Robert Hobbs, deputy director of the National Consumer Law Center. Examples include “personal service” where the summons and complaint must be hand-delivered to the person being sued or “abode” service, where they serve notice on the last known residence, to a person of suitable age. A description of different types of service can be found on the California courts website, though again, keep in mind that the type of service required in your case will depend on several different factors.

“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,” says Hobbs. “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,” he warns.

Trying to handle this yourself can be tricky. “The truth is there is a reason that we have law school,” Hobb says. “The collection attorneys have gone to law school. They win hundreds of cases every week, thousands a year.”

But that doesn’t mean debtors shouldn’t fight back if they believe they have been the victim of improper service (sometimes referred to as “sewer service”). In 2009, for example, then New York Attorney General Andrew M. Cuomo’s office sued 35 law firms and two debt collectors in New York State in order to throw out an estimated 100,000 default judgments improperly obtained against New York consumers.

A consumer law attorney may be able to help you determine if you have a case against the creditor or collector who sued you to obtain the judgment. Most offer low-cost or free consultations and charge reasonable fees.

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. “Get everything documented” suggests Michael Bovee, founder of Consumer Recovery Network. “What I am seeing is that sometimes 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, as in Mark’s case above, 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). One of our readers wrote:

I have 2 judgments for credit card debt. One has already started garnishing some money from my bank checking account. I’m unemployed and there is very little money in that account.

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.

Image: iStockphoto

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Lexis

    wanted to get an opinion on what to do about an issue I just was made aware of. I received a phone call this morning from a collections agency about my Chase credit card balance. I was unaware of any due balance since I rarely use this credit card and used it only for establishing credit when I was in college. I have a credit score of 796 with only my student loans and car as my debt. The billing statements were being sent to an old address according to both Chase and the collections agency. The collections agency connected me with a Chase manager to figure out what the charges were and on what date. Apparently, I had a $101.92 balance on a card from a Sept. 7, 2012 rental car charge that had gone to collections as of April 30,2013 at $310.40 due to late fees and interest. Having never made a late payment, minimum payment, or anything of the sort I was completely shocked that this had occurred. If I was aware of ANY charges they would have been paid in full at or before the due date as I ALWAYS DO. Well, the Chase manager was kind enough to take off the interest and late fees making my balance due $101.92 which I paid today. I then called the collections representative I had been dealing with to let him know that he should be seeing the letter from Chase regarding my account within a few days. I don’t want any blip on my credit report. How can I go about correcting this issue besides paying my balance due? The woman at Chase said that it’s out of her hands once it goes to collections. Is there anything I can do like write a letter to Experian, Transunion, and Equifax asking to delete the charged off credit card? I realize that this isn’t a large charge amount, but I’m very concerned about my credit being negatively affected. Any suggestions would be great!

    Thank you for your time.

    • Jade

      I am wondering if you checked your cc statements or have requested a statement for that time period… if in fact this charge is yours; you will have to pay it and I would pay the creditor directly and not the collection agency and do it in writing.

      In my experience, the original credit has never turned down money for a bill owed. Secondly, if the collection agency makes notation on our CRA that the collection has been paid; they are in violation of law because they did not collect the money. Two entities cannot collect on the same debt.

      SEE: United States of America VS NCO Financial Group: This collection agency violated the law in two ways: 1. They failed to report all dates of deliquency; 2. They were still trying to collect on a account that the consumer had already paid to another collection agency. In essence, they were commiting fraud.

      I hope this helps…

  • Jade

    I have a small claims judgement on my CRA. It has already been paid. However, it appears the judgement was placed on my CRA prior to the 30 waiting period mandated by the court for appeal purposes.

    Questions: Since the judgement is paid and the judgement was placed on my CRA prior to the 30 day waiting period; can I have this judgement removed due to violation of the courts mandate per 30 days waiting period…

    • Credit.com

      The waiting period would have only been for you to appeal the judgment to fight it. Since you paid the judgment, I’m assuming you didn’t fight it and the debt was valid. Which means the judgement is accurate and exists/occurred, even though you paid it and it will remain in your credit reports until it expires. (7 years)

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  • http://www.Credit.com/ Gerri Detweiler

    This is not an uncommon problem you’ve experienced. We wrote about it in this article: Credit Report Double Jeopardy Means Double Damage

    As for the unemployment issue, the procedures for this may be different than for consumer debts. We’ll have to suggest you talk with an attorney who handles unemployment disputes.

  • http://www.Credit.com/ Gerri Detweiler

    Unfortunately the judgments will remain on your credit reports for seven years from the date they were entered by the court (if they are paid). Until they are paid, they can be reported indefinitely. Making payments on judgments doesn’t help your credit scores. It sounds like you are doing what you can on that front.

    As for the tax liens, you may be able to get those removed from your credit if you qualify under the IRS Fresh Start program. I would encourage you to check that out: Getting a Tax Lien Off Your Credit Reports

  • http://www.Credit.com/ Gerri Detweiler

    Ian – First you can try disputing them and see what happens. If that doesn’t fix it then you will need to contact the court that is reporting it. Will you let us know what happens?

    A Step-By-Step Guide to Disputing Credit Report Mistakes

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  • Dawn

    In 2012 out of no where my bank accou t was frozen. After making calls i found out it was from a judgement that i never went to court for regarding dental work i recieved under my mothers insurance when I was in college. I paid the original balance and they lifted the hold on my account. Now almost a year and half later they send me a letter saying they put a lien on my house due to the unpaid interest. Can I be charged eight years interest on a judgement that never showed up on any of my credit reports and I was never mailed a bill for ?

    • http://consumerrecoverynetwork.com/ask-a-question/ Michael Bovee

      Judgments are a court issue. They can show up on your credit, but do not always.

      You can be sued without being mailed a bill. You can be charged interest on a judgment, rate set by the court, and allowed in your state, and for the life of a judgment. Judgment debt can result in a lien on real property (will vary by state).

      If you want to see if there are any holes in the process the judgment creditor followed, run your scenario by an experienced consumer law attorney that is familiar with judgment enforcement in your state.

  • http://www.Credit.com/ Gerri Detweiler

    That is absolutely not true. If you were a victim of id theft then the debt – and judgment – is not valid. However, getting a judgment vacated is not an easy process. Do you belong to any organizations the offer id theft resolution assistance? Through your auto or homeowner insurance for example?

  • Jmil

    Hi. I had a question I was hoping you could help me with. I am weeks away from closing on my first home and back when I was pre approved there was a judgment found on my credit report. Turns out it isn’t mine. It’s my fathers. I am a jr. At the time the lender said she would see what she could do. Now yesterday she tells me I need to dispute it. So I contacted equifax and sent in some supporting documents to prove that I am not my father. I started reading online and everyone is making it sound as though this is not going to be an easy task. I contacted the court house and they said there is nothing they can do. I contacted the plaintiffs attorney and they won’t help either. My father doesn’t even owe this judgment anymore and I asked the attorney if they could please submit a paper to the court saying it was satisfied and they refuse to do that. They said it won’t help me anyways. Is there any way to find out what company reported this to equifax? The court says they don’t know what company did it. They said they have multiple companies that do it and they don’t know which one did it. I have not lived in this home in 10 years and yet they added it to my report based on name and address because that address shows up for my previous address. I am scared this is going to hinder my first time buying a home. Please tell me what else I can do! Thank you!

    • http://www.Credit.com/ Gerri Detweiler

      I know this is incredibly frustrating, especially when you are on a tight deadline. First of all, in terms of correcting your credit report, your loan officer should be helping you here. Telling you just to dispute it with the bureau could hold up the process. Your loan officer should have access to something called “rapid rescoore” and if you can get something that identifies that this belongs to your father and not you then she can submit it to the credit reporting service they use to get the correction expedited.

      So how did you determine the judgment was your father’s and not yours? If you have any kind of documentation that shows it’s his then your loan officer should be able to get it corrected through the agency she uses.

      As for the other issue, if the judgment was satisfied then the judgment creditor is typically required to notify the court. (How quickly they must do so is a matter of state law, but the time period is usually short.) If they don’t, there may be financial penalties. But your father is the one who needs to insist they do that. Can you get him to put the request in writing to the plaintiff’s attorney? He should send the letter by certified mail. If they refuse, then I’d suggest he contact his own consumer law attorney or file a complaint against the judgment creditor/attorney with the Consumer Financial Protection Bureau.

      It does matter to him by the way, while it may not result in it being removed his credit reports right away paid judgments do have a different reporting period than unpaid judgments.

      I am appalled to hear the run around you are getting.

  • http://consumerrecoverynetwork.com/ask-a-question/ Michael Bovee

    You need to get your hands on the court record. Is the court one that has records available on line? If not, do you have someone you know nearby that can go in and get a copy?

    What is your goal for this account? Fight it as bogus from the start? Pay and move on with life?

  • anna

    My bankruptcy was discharged in 01/2012. I included a judgement. I did my annual credit check this year and its now listed. Can I dispute it?

    • http://www.Credit.com/ Gerri Detweiler

      Including a judgment in your bankruptcy doesn’t erase it from your credit reports. Paid or satisfied judgments (which this one should fall under) can be reported for seven years from the date the judgement was entered by the court. So it depends on when this judgment was entered. It should be removed 7 years after that.

  • http://www.Credit.com/ Gerri Detweiler

    It will probably be off there before the exact date comes along. It’s not unusual for the agencies to remove it the month before it is due to expire. It would be a good idea to monitor your free credit score – hopefully an increase is coming! (It is satisfied, right? Unpaid judgments can be reported longer.)

  • Juan

    I am currently a few weeks away from closing on VA home loan. My Va Loan officer just notified me that i have 2 judgements against my wife and I. The loan is only in my name due to my wife’s bad credit. The judgement was in my wife’s name, but i was notified that in Illinois a judgement can also go against the spouse even if its not their bills. What can i do to get past this hurdle in time to close on my loan date which is supposed to be by the 24th of July.

  • http://www.Credit.com/ Gerri Detweiler

    It’s possible. The credit report may simply list the judgment amount but there may be interest and/or other fees added, depending on what is legal in your state. I’d recommend you read this article next: Creditor Gets a Judgment Against You – Now What?

  • http://consumerrecoverynetwork.com/ask-a-question/ Michael Bovee

    What you describe, being hit over the head with a court judgment you knew nothing about, is not unheard of. The earlier you catch it, the better.

    There are often limitations to what can be done with something as old as this judgment.

    Who is the judgment creditor (named plaintiff)? Who was the attorney collector at the time the judgment was entered? Who is the attorney trying to collect now (if different)?

    I would encourage you to talk to an attorney with debt collections defense experience. There are some options to try to undo that judgment, but maybe not this far down the line. If there is precedent for vacating a judgment this old in Florida, debt defense attorneys would know, and be able to advise you. Look for an attorney near you at http://www.naca.net.

  • http://consumerrecoverynetwork.com/ask-a-question/ Michael Bovee

    Right away I would request a hearing to try and show how you are partially or fully exempt from garnishment. If the garnishment notice from the court does not have the instructions for how to contest, call the court clerk and ask about what your next step to request the hearing is.

    I would then look at my options with an experienced consumer law attorney. It is possible to “undo” a judgment, but it is situational, and something you would want to consult with an attorney about.

    What state are you in?

  • http://www.Credit.com/ Gerri Detweiler

    I don’t understand Robert; why won’t the company that issued the satisfaction of judgment correct it to include your name?

  • Curious

    I had a judgment from Oct. 2009 against me. Once I was made aware of it, I called to make payment arrangements. The landlord told me I owed $5000, when the judgment stated $1000. I disputed owing that much and have the paperwork to show I didn’t break the lease (which is what they are saying). In Feb. 2014, I paid the $1000 + interest + court fees with a money order and had it delivered certified. The landlord company never cashed the money order. The bank (where I got the money order) informed me after 90 days the money order would be null and void and that money would be lost. I kept calling the landlord to see if they would mark the judgment satisfied and they kept saying that amount is not correct on the judgement. Well on the 90th day, I filed a stop payment on the money order to get that money back since the company was letting it become void. I sent them a letter of intent to file a motion to have the judgment marked satisfied in court. The manager informed me she would mark it satisfied but I still was responsible for the balance of $4000 she believes I owe. So now 6 months after they received the money order, they decided to cash it. Well I have already received a notice from the court clerk that the judgment has been marked satisfied. Now the landlord is threatening to reverse the notice of satisfaction because the money orders had a stop payment on them. I called the bank and the branch manager said the money orders couldn’t be cashed anyway because it was 6 months old. So my questions are 1) Can they file another judgment against me now – 5 yrs later for the total they believe I owe? 2) Can they reverse a notice of satisfaction even though they let the money order expire ?

    Thanks!

    • http://www.Credit.com/ Gerri Detweiler

      As much as I’d love to be able to advise you this is a situation that really requires the expertise of a consumer lawyer who is familiar with the laws and procedures in your state. It may be the statute of limitations has expired – or may not. If you aren’t sure where to find an attorney to talk with I’d suggest NACA.net.

  • http://www.Credit.com/ Gerri Detweiler

    It is really important you find out what the statute of limitations is for this debt. That will depend on state law. You can use this chart as a basic guideline but I’d recommend you confirm it by doing your own research on landlord-tenant law in your state. Statute of Limitations On Debt Collection by State It may very well be that this debt is too old. If that’s the case, then you can send collection agency certified letter stating that you are aware that this debt is time barred and that you don’t want them to contact you again.

    (I see that you commented on our story about judgments. If there is already a judgment against you then this advice does not apply.)

    However, it sounds like the bigger issue is that they are trying to collect a debt you don’t believe you owe. You have the right to dispute the debt within 30 days of the letter from the collection agency. We recommend you do so in writing and send your letter by certified mail. Separately, you have the right to dispute the items on your credit report directly with then credit reporting agencies and we recommend you do so by certified mail.

    If they continue to try to collect the debt, and continue reporting it on your credit reports, you may need to either get your own attorney involved, or you could try filing a complaint with the Consumer Financial Protection Bureau.

  • http://consumerrecoverynetwork.com/ask-a-question/ Michael Bovee

    Are you a contractor with the US military, or working for a contractor to military now?

    Are you concerned about DOD security vetting, or is there some other angle to the judgment?

    What state are you in? Was the process that led to the judgment managed in court from start to finish, or is the judgment the end result of arbitration?

  • http://consumerrecoverynetwork.com/ask-a-question/ Michael Bovee

    Have you talked about any of this with your CO?

    The amount is quite large. Even settling for a healthy reduction may still be out of reach.

    Bankruptcy could potentially help you move on without the judgment looming over you. But that is also something to cover with your CO.

  • http://www.Credit.com/ Gerri Detweiler

    It sounds to me like you’re going to need to get an attorney involved. You may have a case for credit damage. If you don’t how to find one you can visit the website of the National Association of Consumer Advocates.

  • http://www.Credit.com/ Gerri Detweiler

    Wendy – While I understand you want to take care of this fast, it may not be that simple. This is now a legal matter with the courts. You should have been notified that they were suing you for this balance and had the opportunity to challenge it at that time, but it’s not clear what happened there.

    It is also not clear where this bill originated. Did your daughter ever go to the ER at the hospital that placed the judgement? Did you get bills at that time? Was there an unpaid balance? If there was a balance that wasn’t paid, as the parent you would have been legally responsible. When was the judgment entered by the court and by whom? You may have to do some digging to get answers.

    Quite honestly given that this is not a small amount of money and you are trying to buy a house, I would suggest you consult with a consumer law attorney who can help you understand your rights and options. You can find one in your area through the National Association of Consumer Advocates website. Or depending on where you live, there may be a Legal Aid office that can help.

  • http://www.Credit.com/ Gerri Detweiler

    What exactly is being reported?

  • http://www.credit.com/ Credit.com Credit Experts

    The older it gets, the less impact it will have on your credit scores. We wrote about the issue here: How Can I Erase Judgments From My Credit Reports?

  • Julie

    I need help please! I received a call from my bank this morning that my account is “on hold” due to a “citation to discover assets”. I was given a phone number to call and find out that this is from a judgment allegedly filed against me in June of 2008! I have checked my credit report and there is NO RECORD of any such judgment. Do I have any recourse?? All the money I have in the world is now frozen in this account and I have no way to pay my bills. Can anyone help me?

    • http://www.Credit.com/ Gerri Detweiler

      Julie – Perhaps it is a mistake and they have the wrong person. Go to the bank and try to find out more about who placed it, where the judgment is supposedly entered etc. Then you may need to contact the court and/or the judgment creditor to try to find out what is going on. You may also want to consult a consumer law attorney but hopefully you can get to the bottom of it quickly.

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