You have a judgment showing up on your credit report. You have two choices. Pay off the debt and get a satisfaction of judgment or dispute the item with the credit bureaus.
Judgment
A judgment is a court order for someone who has not been able to pay off his past debt and the creditor has filed a lawsuit against him. The court will not force the debtor to pay back the creditor. Instead, the creditor has to take necessary actions on their own to collect the debt from the debtor. There are several ways of doing this.
If the debtor owns a property, they can have the judgment recorded in the counties where the property is located. If the debtor is trying to sell or refinance the property, a title search will show the judgment. The judgment is a lien on the property, just like a mortgage, and it has to be paid off before the property can be sold or refinanced.
If the judgment is for a high amount of debt, and the debtor has non-exempt equity in the property, then the creditor will try to put a lien on the property and then sell it to pay off the judgment. Now, if the debtor is residing in that property, there are certain rules that must be followed. For example, in US, a creditor cannot claim a certain portion of the equity in the real estate. This means that the debtor can keep that portion in equity from the sale.
Not only just property, judgments can also be collected against bank accounts, and wages through garnishment. Finally, a creditor can elect to have the county sheriff seize non-exempt personal property from the debtor and have it sold at a Sheriff’s Sale.
Unsatisfied civil judgment will have a negative impact on your credit scores. The credit bureaus collect information about judgments by searching real estate and court records. Once you have paid off a judgment, you must ask the creditor to file a satisfaction of Judgment with both the court, and in any other counties where the judgment was recorded. This will prove that the judgment was paid, and it will not do any damage to your real-estate transactions.
Once the satisfaction of judgment forms are filed, still if the judgment shows up on your credit report, then you must dispute the item with the concerned credit bureaus. Write a dispute letter to each of the credit bureaus informing them that the judgment is been paid. You can also attach a copy of the satisfaction of judgment from the court. The credit bureaus will have 30 days to verify your information with the court, and if all the information is found to be correct, they will show it as a paid judgment on your credit report.
In some states, the social security number of a judgment debtor is not included in the court file. Because of this, the credit bureau may list the judgment on the credit reports of all debtors with the same or similar name. If you see a judgment wrongly showing up on your credit report, immediately write a dispute letter to the credit bureau and get it deleted.
Important links:
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm
This entry was posted on Thursday, October 18th, 2012 at 3:24 pm and is filed under Credit report, Judgment. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.