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Strategies to tackle and dispute judgments on credit reports

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Anyone with a judgment on their credit reports knows the serious negative impact they have on FICO scores. The Fair Credit Reporting Act, the federal statute that defines the rules of credit reporting, allows judgments to remain on credit reports 7 years from the filing date.

But unpaid judgments can be renewed at the judgment creditor’s discretion causing the negative mark to be reported for an additional 7 years from the new filing date.

Here are several strategies to deal with judgments:

1. Find an error or inaccurate information.

The FCRA requires all information reporting on consumer reports to be accurate. Inaccurate information can be disputed directly with the credit bureaus asking for the item to be corrected or deleted. Inaccurate information on judgments may be the amount reported, dates, addresses or any other information that contains an error.

2. Vacate the Judgment.

(Legal Disclaimer: The information provided herein is for informational purposes only and is not intended as a substitute for professional legal advice.). The legal procedure known as “vacating a judgment” may be possible under certain circumstances. When a court vacates a judgment, it’s as if the judgment never existed. The credit bureaus will have to delete vacated judgments from credit reports.

Example of Reasons to Vacate a Judgment.

Improper Service: In 2009, New York Attorney General, Andrew Cuomo, sued 35 law firms and two debt collectors in the state of New York in order to vacate an estimated 100,000 default judgments that were improperly obtained against New York consumers. His investigation found that thousands of consumers were not properly served with lawsuit and the firms hired to serve the lawsuits were unable to provide the courts with any evidence proper service had been made.

Falsified Affidavits: In 2015, the Consumer Financial Protection Bureau took action against two of the nation’s largest debt collectors, Portfolio Recovery and Encore Capital. The debt collectors filed numerous lawsuits against consumers using falsified affidavits. The signer of the affidavits had no knowledge of the facts or documents attached to the lawsuit.

Satisfied Judgments: Depending on your state laws, you may be able to have a satisfied (paid) judgment vacated. Look in your state’s civil code laws for reasons a judgment can be vacated. In some states you can file motion on grounds its been paid; in other states it may be automatically dismissed once a judgment has been satisfied.

Each state varies when it comes to vacating judgments. Go to your state court’s website and search for a “Motion to Vacate” form. But getting a judgment vacated may not be a settled matter. If you owe the money that is the subject of the lawsuit, it’s reasonable to assume that the creditor may re-file the lawsuit after correcting whatever issues that led to a successful motion to vacate.

3. Settle the Judgment.

Get the creditor to vacate the judgment as part of a settlement agreement. You may not be able to settle for less if you take this route because it involves the creditor’s attorney to do a little extra work. As part of a settlement be sure to do the following:

  • Get the creditor to vacate the judgment and dismiss the lawsuit.
  • Get the entire settlement agreement in writing before you pay the money.
  • Ask the creditor if you’ll owe income taxes on any of the debt that may be forgiven if you settle for less than what is owed.

Keep in mind your primary goal is to clear up your credit so you do not want a “satisfied” or “paid” judgment on your credit files. You want the judgment deleted through vacating the judgment.

4. Request Method of Verification for Verified Disputes.

If you choose to dispute an error or inaccuracy in the judgment the credit bureaus almost always verify the dispute as accurate. But don’t be discouraged if this happens. Request how the credit bureau verified the judgment as accurate through the Method of Verification.

The Fair Credit Reporting Act (FCRA), requires the credit bureaus to verify items with the original source (furnisher of information) if they are disputed. Courthouses and court clerks are not furnishers of information. They do not report information about judgments (or any other public record) to the credit bureaus.

What happens is the credit bureaus seek out information regarding judgments through the use of 3rd party public record vendors like PACER and LexisNexis. Once a credit bureau has acquired information about a judgment, they include it in your credit files.

Method of Investigation. Find out how the credit bureaus verified the judgment as being accurate under Section 611(a) of the FCRA – Procedure in case of disputed accuracy – Reinvestigations of Disputed Information.

Under the FCRA 611(a) dispute process, the credit bureaus are required to forward your dispute to the reporting party (data furnisher). Ultimately that would be the creditor who brought the lawsuit against you, not the 3rd-party public record vendor. The creditor is then required to conduct the dispute investigation and provide verification back to the credit bureaus.

What you really want to know is — did the credit bureau forward the dispute to the party who reported the judgment? You can get this information by requesting the Method of Verification under FCRA 611(a)(6)(B)(iii) and also request their procedures used for the investigation. This requires the credit bureau to disclose the following:

  • The name, business address, and telephone number of the furnisher of the information.
  • Who they actually referred your dispute to, and who responded back with the required “verification.”

Once you have this information you set the foundation to demand the credit bureaus delete the judgment for failure to comply with the investigative procedure set forth in FCRA Section 611(a). You can also use the information to make a complaint with your state’s Attorney General and the Consumer Financial Protection Bureau and here is why:

  • Did the credit bureaus verify the judgment with the furnisher of information (creditor that sued you) as required by the FCRA or did they verify with the public record provider.
  • The FCRA requires investigations and information be verified by the furnisher of information, not a public record vendor like PACER or Lexis/Nexis.

The credit bureau failed to comply with their statutory obligations under the FCRA because Section 611(a)(2) requires the credit bureau to notify the party who reported the disputed information of the dispute within 5 business days your filing the dispute. That notice is to be directed to the address of record provided by that furnisher of information which is the creditor, not the courthouse, county registrar or court clerk.

After the creditor receives the notice from the credit bureau, the creditor must conduct an investigation of the disputed item and report the results of the investigation back to the credit bureaus. This must be done within a 30-day dispute period.

If the credit bureaus do not receive proper verification of the accuracy of the information back from the furnisher of information, then the credit bureau is required to DELETE the information under FCRA 611(a)(5)(A)(i). Again, courthouses, court clerks and county registrars are not furnishers of information to the credit bureaus nor do they verify the accuracy of information. That must be done by the creditor who sued you.

The credit bureaus can verify through public records on their own but that does not exclude them from their responsibility to send disputes to the creditor (furnisher of information) for verification.

Sample Method of Verification Letter:

“Under the Fair Credit Reporting Act, section 611(a)(7), I am requesting a description of the procedure used to determine the accuracy and completeness of the information: This information should include who you referred the dispute to and who responded back with the required “verification and the business name and address of any furnisher of information and the telephone number of such furnisher, if available.”

The credit bureaus have 15 days to respond to your MOV request.

If this is just too much for you, I recommend you call Lexington Law at (877) 587-4574 they are a trusted leader in credit repair and have extensive experience removing negative credit from consumer credit reports.

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