Can I Get Mortgage With Judgment?

A judgment is one of the worst derogatory items that you can have on your credit report.  Actually, it is worse than a bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short sale.  When you default with your creditor, your creditor can sue you and take you to court.  The creditor needs to follow proper procedures in the suing process.  The creditor files the lawsuit in court and once it is filed the sheriff’s department of the county needs to physically serve you.  There are other methods of service depending on the county and state you live in.  If you do not show up for court or if you lose the lawsuit, then the judge will issue a judgment.  A judgment is a court order allowing the creditor to pursue further collections on the unpaid debt by wage garnishment, asset forfeiture, bank account levies, placing liens on real estate and property.   Most creditors prefer borrowers with a bankruptcy than those with judgments on their credit reports.  A bankruptcy wipes the slate clean and you have no liabilities that will haunt you from the past.  However, a judgment is a can of warms that can blow up at any time.  Statute of limitations on judgments are 10 to 20 years depending on the state and judgments can be renewed for another 10 to 20 years.  In most cases, a judgment will remain dormant after 5 years of inactivity and most creditors decide not to pursue the judgment debtor because they just assume that the judgment debt is judgment proof.

What Is Judgment Proof?

If you are judgment proof, it means that you are uncollectible to a judgment creditor.  If you do not have income nor any assets, a judgment creditor cannot come after you.  The courts do not enforce collection on a judgment.  It is up to the judgment creditor to enforce a court judgment.  If the judgment creditor finds out that you are making good income and have assets, the judgment creditor can pursue enforcement actions by trying to garnish your wages, levying your bank accounts, and placing liens on your assets.  The first three years after your judgment, the judgment creditor will most likely aggressively pursue enforcement activities and after that period the judgment will most likely be dormant.  However, just because your judgment is dormant does not mean that you are off the hook.  In the event if the judgment creditor finds out that you won the lottery or inherited tons of assets, they can come after you and they have between 10 to 20 years to come after you.

How Can I Get Rid Of Judgment?

There are three ways of getting rid of your judgment.  The first way is to try to get your judgment vacated due to improper service.  If you have not been served or improperly served by your judgment creditor, you can try to get the judgment overturned by the courts due to improper service.  However, most states only give you 3 years to get a judgment vacated and after that period, you lose your right in getting your judgment overturned.  The second way to get your judgment off is to pay off the judgment or to settle with the judgment creditor.  The older your judgment is, the more likely the judgment creditor will be willing to negotiate for a percentage of the original judgment amount.  Also, the judgment creditor may require you to provide them with a Personal Financial Statement and run a financial background investigation.  If you have little or no assets and very little income, the chances are that the judgment creditor will take pennies on the dollar.  They rather take a little something than nothing.  The third way of getting rid of a judgment is by filing bankuptcy.  Most judgments gets wiped out with a Chapter 7 bankruptcy unless they are judgments that involve fraud and/or child support/alimony judgments.  Tax liens, student loans, and government loans and government judgments cannot be discharged with a bankruptcy.  You should consult with a bankruptcy attorney if you are contemplating getting rid of your judgments through bankruptcy and they should be able to tell you whether or not bankruptcy is the right avenue for you.

Can I Get Mortgage With Outstanding Judgment?

Yes.  Most mortgage lenders do not want to see a mortgage applicant to have a judgment on their credit report.   You can qualify for a residential mortgage loan with open collections, however, if your collections have high balances on them, many mortgage lenders will frown on that.  The reason being is because collection accounts can turn into judgments if the creditor decides to pursue collection efforts.  You can get a mortgage loan with an outstanding judgment if you have a payment agreement and make at least three months of payments to the judgment creditor.  Three  months of cancelled checks needs to be provided.

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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.

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