Credit Report Judgments

What happens if there is a judgment on your credit report but you can't resolve it? The creditor who got the judgment has disappeared or gone out of business, for example, and you can't track them down. Attorney Jonathan Ginsberg joins me to explain "zombie judgments" that just won't go away. We discuss:

-How to find a judgment creditor that has gone bankrupt,
-Why disputing it with the credit reporting agencies probably won't make it disappear,
-How old judgments can be a ticking time bomb
-Your options for resolving these debts

And more! Ginsberg is one of my most popular guests. This episode aired live November 3, 2012.

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Excerpt from this interview:


Gerri: First, I want to start at the very beginning and describe what a judgment is and how these things end up on your credit.

Jonathan: A judgment is basically when a court has a mandated decision that you owe money. In other words, if you owe money to somebody and they file a lawsuit against you, you’re supposed to be served with papers. If you answer those papers and you go to court, (and) a judge finds against you, then a judgment will be issued. It’s a formal filing by the court that you owe something or something has been decided. If you don’t answer, it’s a “default judgment.” But either way, a judgment is where a court made a finding of law that you owe money.

When They Never Really Disappear

Gerri: One of the big problems right now is judgments from collection agencies. They’re either collectors who are trying to collect from them or maybe debt buyers, which are a type of collection agency that buys old debts. (Let’s take La Recia’s situation.) She asks, “Can a judgment be removed from my credit if the collection agency has gone out of business?”

Jonathan: The main thing to remember here is there are two separate systems in play. One of them is of course the credit reporting system, which is private — that is where you have companies like Equifax or Transunion, or Experian. They report credit for private business. These are not government agencies. They’re private companies, they’re governed by a number of laws but they’re not government agencies.

A judgment, on the other hand, is where a creditor has gone to the court and gotten an official judgment from a court, which again has the power of law. In this particular case, the problem we’ve got is that the judgment creditor — that’s the person who got the judgment — filed a lawsuit, let’s say it was a default judgment, judgment was issued, now they’ve gone out of business.

The problem is that the judgment itself is on the public record. The very fact that the judgment creditor has gone out of business does not automatically remove it from the public records. Essentially, you have a judgment creditor that is long gone but the judgment remains out there and obviously it’s damaging your credit. I suggest a couple of things: One is that since the judgment creditor is in bankruptcy, there is a record of that bankruptcy. So one thing that she could do would be to look on the Pacer system, that’s Pacer.gov, and look up the bankruptcy filing of the judgment creditor. There will be a trustee in that bankruptcy case. Contact the trustee and see if they can negotiate a settlement for pennies on the dollar on that judgment and get it released. That’s one way to deal with it.

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