Judgments are the worst derogatory items you can have on your credit report when it comes to qualifying for a residential mortgage loan. You can have open collections, charge offs, aged late payments, repossessions of automobiles, but you cannot have an open unsatisfied judgment.
Home Loan With Judgment
The good news is that you can have a judgment and still qualify for a residential mortgage loan only if you have a payment agreement into effect and in writing and you can show that you have been making at least two months of payments by providing cancelled checks. Your monthly payment for your judgment is calculated as part of your debt to income ratios. A monetary judgment is court order that states the amount of money you owe the judgment creditor and it is issued by a judge. Most judgments are good for 10 years and the judgment creditor can renew it for another 10 years.
Judgments: How Do You Get A Judgment Against You?
All judgments are issued by a judge in a court of law. The judgment creditor needs to subpoena you to court. You can contest the debt the creditor is suing you for and it is up to the judge to decide whether a judgment is warranted. In the event you do not respond to the subpoena, the judge normally issues a judgment against you in favor of the judgment creditor. The judgment is then recorded and becomes part of public record and it is reported to all three credit reporting agencies: Transunion, Experian, Equifax. Unsatisfied judgments remain on your credit report for 7 years from the recorded date. Paid judgments remain on your credit report for 7 years from the judgment recorded date and not the payment date. After 7 years, it must be removed from your credit report.
Enforcement Of Unpaid Judgments
A judgment can be enforced by a judgment creditor within a certain period of time. Each state has its own rules and laws concerning how long a judgment is good for but in general, judgments statute of limitations is 10 years from the judgment recorded date. Most states allow judgments to be renewed after the first round of the statute of limitations.
Once you get a judgment for a set dollar amount, many states allow judgment creditors to charge interest on the unpaid judgment balance. The judgment balance can include court fees, attorneys costs, and other third party charges.
Collection On Judgments
A judgment creditor may choose to hire a third party collection agency to collect and enforce the judgment. The collection agency or law firm may due their own due diligence whether you have any assets. If they find out you do not have any assets or little to no income, they will classify you being judgment proof and most likely leave you alone. However, if they discover you have assets and have good income, they most likely will try to enforce the judgment through various means. Depending on the laws of your particular state, a judgment creditor can garnish your wages and freeze your bank account. The judgment creditor can also lien your property and/or assets.
How Can I Get Rid Of Judgment?
You can settle on your judgment with the judgment creditor. The older your judgment is, the more likely your judgment creditor will settle. Before you give the settlement amount to your judgment creditor, make sure you get a written agreement that states it is a zero balance.
You can also try to get your judgment vacated by claiming you were not served correctly. This task is often tough but you can give it a try.
Bankruptcy Will Get Rid Of Most Judgments
Bankruptcy is a debt collectors worst nightmare. Bankruptcy will wipe out judgments unless the judgment creditor claims a fraud claim. If you have multiple judgments, maybe a bankruptcy might be your best option. You need to consult a bankruptcy attorney to see if bankuptcy is your best option or whether a settlement is.