Judgments Are A Credit Problem

August 12, 2023


After a creditor goes to court and gets a judgment against you, it can show up on your credit reports as a derogatory item. A judgment often shows up some time after you lose your court case. The purpose of a judgment is both to enforce it, and to record it in the public records.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion based on my experience, please consult with a lawyer if you need legal advice.

Judgments originate because of many kinds of different reasons. Types of judgments include real estate, vehicle, fraud, small claims, family support, bankruptcy, federal, state, banks, credit cards, medical debts, etc.

Unpaid judgments lower your FICO credit score(s). It is best to avoid them and get them off your records if you can. Depending on the type of judgment, your credit score could be quickly reduced.

A creditor can attempt to enforce their judgment, and have the Sheriff levy and sell your available assets. The creditor can also simply write off their debt. Or, they might outsource their judgment to a recovery specialist, attorney, or a collection agency; and not get about half of what is potentially recovered.

A judgment is a public record, that can be found with a public records search. Judgments will probably show up under the public records section of your credit report. Judgments can include court-related costs, penalties, and sometimes attorney fees, not only the amount of the debt.

Through the court, the creditor can perform discovery on you, your assets, and people or companies that know about (or are holding) your assets. When available assets or income streams are found, the creditor can pay the Sheriff to levy your available assets to pay the debt owed.

A judgment on the credit reports can be a problem, when you are trying to get a loan for a house. The underwriter of the mortgage will review your situation to decide if the judgment is just a fluke or not, and review your credit history. In some cases, if you buy a house and are later forced to liquidate it to pay off a judgment, the home lender stands to lose money on their mortgage.

An unpaid judgment can continue to haunt your credit reports for at least seven years from its original date of entry. Sometimes statutes of limitation means that it will come off your credit report sooner than seven years.

Unpaid judgments may remain on your credit reports almost forever, unlike paid judgments which will fall off fairly soon. To help your credit score, get rid of judgments.

If you have a judgment against you, paying it off will eventually remove it from your credit report. After paying it off, it is referred to as a paid judgment. You may need to send the big three credit bureaus a copy of the court-stamped satisfaction of judgment.

It is worth trying to negotiate old judgments. After all, most creditors do not receive a dime for their judgments. Unless your creditor knows the laws and is willing to spend time and money; to have a chance to recover anything, they will be giving up about half of what gets recovered. For this reason, think about starting to negotiate at 40-50% of what you owe.

If the creditor is receptive to negotiations, you may be able to settle the judgment for less. If it is an old judgment, they may be happy to hear from you and get it settled. Some creditors understand that half of something is better than all of nothing.

If the amount owed is large, you may wish to retain an attorney to negotiate for you. Sometimes attorneys can get a settlement amount lower, than you could negotiate yourself.

Judgments affect your credit rating, and affect your ability to get a loan. So, pay off or settle all your judgments if possible.

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