This is not one of the easier things to remove from a credit report.
The first question is: Has the judgment been paid or satisfied?
And the second question is: Has the judgment been vacated?
Third: On which credit report does the judgment appear?
And Fourth: Did the creditor sue the right person to begin with? Or was it Identity Theft or a Case of Mistaken Identity?
I just wanted you to see this up front because it’s important: Just because something is not listed in your credit reports, this has nothing to do with whether or not you still owe the debt. Many things that you do owe, won’t show up in your credit reports. That’s not a bad thing unless you cannot remember whom you owe money to, such as if you want to file a bankruptcy.
An unpaid judgment is the worst thing to have on your credit reports, well second to a foreclosure and about equal to an eviction. An unpaid judgment means that there is a creditor, or the plaintiff, who sued you and won. That creditor/plaintiff can use that judgment to, at any time, garnish your wages if you have a job, levy your bank accounts and take all of your money, (with some exceptions such as social security), and put a judgment lien on your home or other real estate holdings if you own any.
If you need to buy a car, potential new car lenders won’t want to lend to you because if your wages start being garnished then you won’t be able to pay for the car and the lender will have to repossess any car he might sell to you. Property managers won’t want to lease or rent to you because you might miss months of rent, because your bank account was drained by the judgment and then they might have to evict you and that costs extra money they probably will never recoup and might not be able to afford.
Assuming a couple of things up front, such as that you are the person who owes the money and that you haven’t paid the debt off yet, then you’ve got to do something about the debt.
- Pay the judgment or settle it
- Have the judgment vacated or set aside
- Fight the judgment’s validity
- Do nothing
- File bankruptcy
Paying or settling the debt will mean that a satisfaction of judgment can be filed with the court where the judgment was entered. The creditor usually does this but if they don’t, then you can do it yourself. Eventually the satisfaction of judgment will be reported on your credit reports and that’s good for your credit. However, you’ll still have a judgment on your credit reports. Paying it off doesn’t take it off of your credit reports. But still it’s better than being garnished or having your bank accounts levied which is what will happen if you do nothing. (Unless of course you’re self employed or unemployed, because then you can’t be garnished. If you don’t have a bank account or don’t keep money in your bank account then your money won’t be levied when the creditor serves the bank the bank levy.)
Vacating the judgment or filing a motion to set aside the judgment gives you the best result possible. If you can afford to pay the debt or to settle the debt for close to the full balance, or if necessary, over the balance, then the creditor might be persuaded to file paperwork with the court to vacate the judgment. Vacating the judgment takes some extra paperwork on the creditor’s part and that plaintiff usually won’t bother for less than a very high percentage of the balance. A vacated judgment if you can get it done has the effect of basically telling the world that the lawsuit never happened. Credit reporting agencies don’t report judgments where there is no judgment. Sometimes however, you have to ask them to remove a vacated judgment and sometimes you have to threaten them with a lawsuit and sometimes you might have to sue them to get the credit reporting agencies to comply. However, most of the time it won’t come to that.
Fighting the Judgment’s Validity can sometimes work too. Rarely, but sometimes, you might have a viable defense against the judgment such as you were out of the country or out of state when it was “allegedly” served on you at your place of residence or work at a time. When you can proven that you were in Figi or Cancun passed out on the beach and you have the Facebook and Instagram posts to prove it, you might have a good defense to the judgment. there are very few defenses to a judgment once it is entered, but if you weren’t served, that’s a defense that can still work for you.
No service of process, no judgment. In other words, the lawsuit or summons and complaint must be served on you at the start of the case and if that service of process never took place, but the process server says it did, then the court never had jurisdiction over you and could not enter a judgment against you and so you can petition the court to set aside the judgment.
Under the Fair Credit Reporting Act (or FCRA) a judgment will remain on your credit reports for seven (7) years but longer if the length of time that the judgment will remain valid is longer than the seven year period. For instance in California, a Judgment is valid for ten (10) years from the entry date of the judgment. However, a California Judgment can also be renewed for an additional ten years and then it will be reported on your credit reports for an additional ten years.
If you do nothing about the judgment, then if possible, the creditor will garnish your wages, put liens on your home and other real estate and every few months levy your bank accounts. They can also do something embarrassing and potentially devastating which is to have you brought into court for a judgment debtor’s exam. You receive a subpoena ordering you to go to court to explain the nature and location of your assets under oath under penalty of perjury and if you don’t show up, the court issues a warrant to arrest you. You make an illegal right turn and go to jail. But if you’re Judgment Proof, in other words, you’re on social security disability or are otherwise unemployed with no income or a protected income and you don’t have any bank accounts and you don’t own any real estate, then they can tell their tale to the judge like an moron suffering cacophonous anger and still obtain nothing from you.
If you file bankruptcy against the judgment creditor, then at least the judgment will be void, but it will still be on the credit reports for the full seven years from the entry date of the judgment. However, the judgment creditor will no longer be able to renew the judgment because a void judgment cannot be renewed. If the creditor attempts to do so, then you can sue him for violating the discharge injunction as provided by the bankruptcy code.
In cases of Identity Theft or Mistaken Identity, you are supposed to be able to get the creditor and credit reporting agencies to vacate the judgment based solely on the mistake. You must of course prove the mistake. If you were a victim of Identity Theft and the identity thief opened several accounts in your name, it may be easier to prove that this judgment was also one of those incidents of malfeasance. With a Mistaken Identity, it may be a little harder. Especially if you have an extremely common name such as Smith, Jones, Nelson, Guerrero or Patel. A friend of mine, an Attorney name Bill Johnson, was contacted by a guy named Bill Johnson who was being sued by the Los Angeles County Child Support Enforcement Office. Bill went into court and said: “Good morning your Honor, I’m Bill Johnson representing Bill Johnson and he’s not the father and neither am I.” The account was considered “satisfied” and the case dropped.
In Summary, if the judgment is unpaid, then the creditor can collect from you. If you have not assets nor income that can be collected from, then he can’t collect from you. If you file bankruptcy, then he can’t collect from you unless the bankruptcy code allows it. If you are able to pay then the debt will eventually reflect that the judgment was satisfied and that’s good for your credit scores and also tells future creditors that this judgment is at least benign and can no longer cause trouble. If you can pay in full, close to it, or sometimes over, you could get the creditor to help you to petition the court to set aside the judgment or vacate the judgment. The credit reporting agencies such as Trans Union, Equifax and Experian don’t report vacated judgments. However, you may have to ask them to remove the judgment or even threaten them to get it done.
This Just In: According to an article published by Experian in June of 2018, they no longer routinely report judgments. This article is still important because they apparently haven’t gone back into your credit reports and removed all the judgments which were already reported. Those are still there. However, they are no longer collecting new public records of judgments and reporting them except for bankruptcies. Click Here For More Information.
For more detail on how to settle a judgment or how to file a satisfaction of judgment or a motion to set aside a judgment, have a look at the Attorney’s Guide to Credit Repair.