Qualifying For Home Loan With Judgment

A judgment is one of the worst derogatory credit anyone can have on their credit report.  A creditor can sue a debtor if all attempts of collections fail and take them to court.  Proper service is required.  A creditor normally files suit in the debtor’s county court and the sheriff needs to serve the debtor in person.  Once the debtor is served, the debtor needs to show up in court to defend the lawsuit.  If the debtor does not show up to court, the judge will issue a judgment in favor of the creditor and a judgment is issued on the debtor.  The judgment creditor can enforce the judgment for a certain period of time, depending on the state.  Most states have a ten year statute of limitations on judgments but the statute of limitations is dependent on each individual states.  Judgment creditors can also renew their original judgments for an additional ten years after the statute of limitations.  The only way to get rid of a judgment is to settle with the judgment creditor for the amount of the judgment or a lesser amount, enter into a repayment plan with the judgment creditor,  try to get the judgment vacated for improper service, or by filing bankruptcy.

Why Don’t All Judgment Creditors Enforce Their Judgments?

All collection accounts with open balances have potentials of becoming judgments. Why don’t all collection agencies sue and get judgments on their borrowers with bad debt?  The reason being is because suing someone with bad debt costs time and money and if the debtor does not have any income and/or assets, the chances are next to nothing for the collection agencies to try to collect.  Collection agencies are selective on who they go after and try to sue and get judgments on.  If they feel that the debtor has income and assets, the collection agency will definitely go after the debtor and try to get a judgment on them.

Dormant Judgments Can Always Become Active

Once the judgment creditor wins a judgment against a debtor, they will do their due diligence and see if the debtor makes good income and/or has assets.  If the judgment creditor gets wind that the judgment debtor is making good income or has assets, the judgment creditor will then try to enforce their judgment by trying to levy on their bank accounts, investment accounts, and/or try to garnish their wages as well as place liens on their properties.  However, if the judgment debtor has no income or assets nor property, then there is nothing that the judgment creditor can do.  Enforcement of judgment can be quite costly.  If a judgment debtor has no income or assets, the judgment debtor is deemed as being judgment proof, which means that they are uncollectible.  Many judgments just lay dormant until the statute of limitations expire.

Can I Get A Home Loan With judgment?

You can get qualify for a residential home loan with judgment but you need to have to have a written payment agreement with the judgment creditor in place and have at least a three month payment history and need to show three months worth of cancelled checks payable to the judgment creditor.  The payments need to make sense.  For example, if you have a $5 million dollar judgment and are making a $10 per month payment, that will not fly.  However, if you have a $3,000 judgment and are making $100.00 per month payment to the judgment creditor and have a payment agreement in force and have been making payments to your judgment creditor for the past three months and can prove it by providing the mortgage loan underwriter with three months cancelled checks, then it will fly.  For those who have multiple large judgment amounts, the best solution to resolve the judgments will most likely be to either settle them or consider filing bankruptcy.

Will Bankruptcy Wipe Out My Judgments?

All judgments are not wiped out in a bankruptcy. Judgments that the judgment creditors are any governmental agencies are not exempt and cannot be discharged in a bankruptcy.  Judgments that fraud is alledged cannot be exempt from a bankruptcy either.  Child support, alimony, student loan, government loans,  and tax lien judgments cannot be included in the bankruptcy.  All other judgments can be included in a bankruptcy and most often can be wiped out.  If you need a home loan with judgment, please contact me at 262-716-8151 and we may be able to help you.

Gustan Cho


The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.