This BLOG On Alternatives To Bankruptcy Waiting Out Bad Credit With SOL Was UPDATED On November 27th, 2018
For those folks who were hurt financially from the recession of 2008 and have not filed bankruptcy and started to rebuild their lives back, they need to pay attention to the outstanding collections, charge offs, and judgments they may have outstanding.
- Judgment creditors may be dormant now
- But can always come back and start enforcing the judgment
- Judgments are the worst derogatory credit items a consumer can have
- Judgments are good until the statute of limitations on the judgment runs out
- Collections and Charge Off Accounts can always turn into judgments
- Bankruptcy is always an option to get rid of outstanding collections, charge offs, judgments
- Alternatives To Bankruptcy includes waiting out the time until the statute of limitations runs out
In this article, we will discuss and cover Alternatives To Bankruptcy Waiting Out Bad Credit With SOL.
Unpaid Debts And Bill Collectors
Many folks who have endured the tough times and bad credit and with constant calls from bill collectors may now have peace.
- Consumers who had all of your credit accounts go delinquent in 2008, it has been 9 years already
- Depending on which state, some state’s statute on credit card debt is 5 to 6 years
- Many consumers may already have surpassed the time limit
- Statute of limitations on judgments in most states is 10 years
- Judgment creditors can extend it to another 10 years
- Very few judgment creditors renew the judgment
- If creditors have reasonable proof that debtors are back on their feet and are making a lot of money, they may reactivate collection account and try to pursue in collecting the previously owed debt
They can file a lawsuit in circuit court:
- They can hope that defendants do not show up to defend themselves so the judge can issue a judgment
Enforcement Of Judgment By Creditors
With a judgment, the creditor has more avenues to collect the debt.
- Judgment Creditors can try to go after debtor aggressively by trying to garnish wages, placing a lien on the property, or garnishing checking or savings accounts
- Many states have laws to protect the debtor on the amount of how much a judgment creditor can collect
If judgment creditor goes full force in enforcing the judgment, debtors may not have alternatives to bankruptcy.
Judgment Proof As Alternatives To Bankruptcy
For a debtor to be judgment proof, the debtor cannot have many assets.
- If the debtor only has a few thousand dollars and makes modest income, the chances of wages or bank accounts getting garnished are slim to none
- However, if judgment debtors came into a large chunk of change by winning the lottery and the judgment creditor found out about it
Judgment creditors will waste no time in enforcing the judgment.
Settling Judgment As Alternatives To Bankruptcy
Most judgment creditors will let the judgment go dormant if they believe the judgment debtor has not assets.
The only way to get rid of judgment as alternatives to bankruptcy is the following:
- By getting the judgment vacated
- By settling with the judgment creditor
- Entering into a payment plan with the judgment creditors
- Waiting out the statute of limitations
- Filing bankruptcy
How To Qualify For FHA Loan With Outstanding Judgments
On the mortgage end of it, homebuyers can qualify for a mortgage with an outstanding, unsatisfied judgment if they have a written payment arrangement with the judgment creditor.
- FHA borrowers can qualify for FHA Loan With Judgments
- Need written payment agreement with judgment creditor
- Need to make 3 months payments on judgment per written payment agreement
- Borrowers cannot pre-pay the three months of payments upfront to qualify for FHA Loan
- Need three month’s seasoning
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