Home > 2015 > Managing Debt

Do I Have to Pay a Judgment If My Debt Was Forgiven?

Advertiser Disclosure Comments 1 Comment

A reader, Susan, reached out to us to find out if she had any chance of getting a judgment for a medical collections overturned. She said she never received a bill, and the original creditor, a doctor’s billing company, didn’t have a record of it either. But it was on her credit report. And so she disputed it with all three credit reporting agencies. (So far, so good.) But here’s what happened next:

(The) collection agency then serves me with a summons. Within the summons was a date and time for Supreme Court hearing for January 2016. In very small writing on front page it said 30 days to respond. My husband was also named as a defendant but was not served. The collection agency was awarded a default judgement as [sic] now has a lien against my home. I have since spoken with the doctor who told me that he does not handle billing and that he would contact original billing company and have the debt dismissed as professional courtesy. Original creditor called me to tell me debt has been dismissed by the doctor and they will contact collection company to cease all collection activity. Collection company says it’s too late — they already have a judgment against me. Do I have a case to vacate judgment and defend myself?

We checked with Michael Bovee, a Credit.com contributor and founder of the Consumer Recovery Network. He suggested that perhaps the January 2016 date confused Susan, but said that date was likely “calendar management” that can be disregarded by the court if the person who is served fails to formally respond to the summons within the specified timeframe (In Susan’s case, 30 days). “Sometimes words in the law don’t always mean what we think they mean,” he said. And, unfortunately, thinking that no court would act before January 2016 may have been a costly mistake.

Here’s what may have happened. The doctor’s office’s billing company assigned or sold the debt, and the collector that got it won a default judgment due to the consumer’s lack of response to the summons. The doctor’s office may want to have the debt dismissed and all collection activity stopped, but it doesn’t own the debt anymore. The debt collection agency does, and, given they secured a judgment, it’s easy to understand why they aren’t eager to give up on their collections efforts.

Dealing With the Judgment

So what are Susan’s options at this point? “I would file a debt collection complaint with the CFPB and see how this gets addressed from there,” Bovee said. “It is unusual to have an account recalled that has been litigated and a judgment entered, but it is not without precedent.”

Adam Fullman, a debt collection defense attorney in California, said the confusion over dates in a summons is common, but it’s not typically a reason to set aside a judgment. “Lay people assume that the most important thing to [do] is to wait for a hearing and show up, not realizing that they will lose the case long before any hearing if they do not file a timely, formal response with the court,” Fullman said in an email. State laws may vary, he said, but “if this was in California, a motion to vacate default judgment would have very low chances of success.”

Consumers are often taken by surprise when they receive a judgment as notices can be confusing or may get lost in the mail. One way to know whether a judgment has been filed against you is to regularly monitor your credit. You can pull your free annual credit reports at AnnualCreditReport.com and get your credit scores for free each month on Credit.com.

More on Managing Debt:

Image: karenfoleyphotography

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

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.

  • http://www.kennethballard.com Kenneth

    Filing a complaint with the CFPB about the judgment does nothing to get the judgment vacated. She needs to hire an attorney and go after the judgment through the Court, since it is a binding legal action against her, especially since she claims they have a lien against their home. That lien can be floreclosed, meaning so long as the judgment and lien are enforceable, she risks having her home taken from her by the Court. Filing a complaint won’t do anything about the enforceability of the lien and judgment.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team