Confirm Any Information From The Court
If you do receive information back from the court verifying the details of your civil judgment, take the time to make sure that its all accurate.
All of this information goes through so many different touchpoints that theres a good chance some of it was reported inaccurately.
Everything must be error-free. That includes your name, balance, account numbers, dates associated with the account and judgment, and your account and payment statuses.
If you find anything thats incorrect, you can send a dispute letter to the credit bureaus and request that the judgment entry be updated or removed altogether.
Do You Know Your Insurance Credit Score
If there weren’t already hundreds of , your insurance credit score is another alternative credit score;being used to evaluate your credit history. Insurance credit scores are used by insurance companies to determine the risk of issuing you some sort of insurance policy. An insurance credit score is similar to a credit score, wherein it is based on the same credit report information, but it is just calculated differently and there are separate scores for auto and property insurance. This score is used to determine your rates and detect possible claims fraud.
Can A Lawsuit Ruin My Credit
John I was in a car accident and the driver of the other car hired an attorney who sent me a demand letter for $20,000. They have threatened to sue me if I dont pay. Can this ruin my credit if I get sued?
Answer A lawsuit will not have any negative affect on your credit reports or credit scores. Lawsuits are not picked up by or reported to the credit reporting agencies, Equifax, Experian and TransUnion, and if its not on your credit reports then no credit impact. Now, if the other driver does sue you and wins then youll have a judgment against you. Judgments are often picked up and reported by the credit bureaus so if that happens then yes, it will impact your credit. They stay on your credit reports for 7 years from the filing date.
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Interest And Other Charges
Debt collectors may collect interest, fees, charges, or other expenses to your debt only if they are expressly authorized by the agreement creating the debt or are otherwise permitted by law. If you ask, the debt collector must tell you how much it is charging you and why. To do so, send a letter to the debt collector asking for an explanation in writing. For a sample letter requesting information about a debt, see the CFPB’s “What should I do when a debt collector contacts me?”
You may also consult an attorney to find out whether the debt collector is charging you more than allowed by law or by the agreement creating the debt.
What Do I Do If I Have A Judgment Against Me
Make a settlement offer or create a repayment plan
If you can afford to pay the money owed, you can still make a settlement arrangement directly with the debt collection agency. Based on your financial situation, you can start with a partial payment then work out a monthly payment plan. Make sure to get all agreements in writing.; If the debt is old, or if the agency has purchased the debt for cents on the dollar, you may be able to make an offer for much less than you owe.
File for consumer creditor protection
If a creditor or debt collector has proceeded to file a lawsuit and obtained a judgment against you, you are likely at the stage where you cannot afford to repay the debt.; You may also have other debts that are causing you financial problems.
You can stop these legal actions by filing a consumer proposal or bankruptcy.
Both options provide a legal stay of proceedings. A stay in bankruptcy or consumer proposal means that unsecured creditors and debt collectors are prohibited from launching or continuing lawsuits. The stay is automatic and happens as soon as you file.
While in many cases a collection agency is only threatening a lawsuit, if your debt is not past the limitations period and you own assets or earn an income, its very likely that the debt collector will pursue you in court and obtain a judgment against you. If youve received written notice of a court application, act before facing garnishment, a bank account freeze, or a lien on your property.
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How To Remove Civil Judgments From Your Credit Report
In my recent experience, its not hard to remove judgments from your credit report as long as you follow the proper steps.
Many readers assume its impossible to have the credit bureaus remove civil judgments because they involve the court system.
In reality, the National Consumer Assistance Plan has made it more difficult for the credit bureaus to include civil judgments in your credit history.
Its still possible you could see a judgment pulling down your credit score. If so, removing the judgment shouldnt be too big of a hassle.
How Long Do Public Records Stay On Your Credit Reports
The Fair Credit Reporting Act is the federal law which sets rules about the information allowed on your credit reports. Among those rules, the FCRA sets time limits or expiration dates for credit reporting.
In general, most negative information isnt allowed to stay on your credit reports forever.
- Bankruptcies can stay on your credit reports for up to ten years from the filing date.
- Judgments are no longer shown on credit reports.
- Tax liens are no longer shown on credit reports.
There are two different types of bankruptcies Chapter 7 and Chapter 13 and there are different reporting rules governing each.
Completed Chapter 13 bankruptcies can remain on your reports for seven years. However, Chapter 13s can take a few years between the bankruptcy filing and completion . To accommodate for this fact, the FCRA caps the total amount of time a Chapter 13 can remain on your credit reports at ten years from the date filed.
The credit reporting rules for Chapter 7 bankruptcies are less complicated. Chapter 7s can stay on your credit reports for up to ten years from the date you filed.
Currently, civil judgments do not appear on your credit reports at all.
Yet this change was due to a settlement the credit bureaus made . The FCRA still allows judgments to remain on credit reports for seven years from the filing date.
Again, you wont find tax liens on your credit reports due to current credit bureau policy.
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Who Can See And Use Your Credit Report
Those allowed to see your credit report include:
- banks, credit unions and other financial institutions
- offer you a promotion
- offer you a credit increase
A lender or other organization may ask to check your credit or pull your report”. When they do so, they are asking to access your credit report at the credit bureau. This results in an inquiry in your credit report.
Lenders may be concerned if there are too many credit checks, or inquiries in your credit report.
It can seem like you’re:
- urgently seeking credit
- trying to live beyond your means
Appeal For A Vacated Judgment
Anyone who follows the news knows that a single court judgment is rarely the final word on any matter. You could appeal the civil judgment and any resulting court orders.
If the creditor who sued you didnt follow the proper legal steps, for example, you could get the ruling overturned. Or, if the debt is older than your states statute of limitations on debt you could get the case overturned.
Then, you could reliably get the judgment removed from your credit history. Youd may have to hire a lawyer, but if the debt is big enough this might pay off. You may not need a lawyer if the debt predates your statute of limitations. This is usually an easy dismissal.
If you get a vacated judgment on a technicality, the creditor could sue you again.
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What Others Are Saying
WOW! The service with you guys is unbelievable! Thanks for all your help. You guys are helping me build a better future. Thanks.
M.W., Lexington client
I just wanted to thank you for what you have done thus far I am looking forward to the day when my credit reports will be looking like new again. Its a pleasure to have you on my team. Thank You.
L.S., Lexington client
Filing Complaints With Regulatory Agencies
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Harassment And Call Restrictions
Debt collectors cannot harass or abuse you. They cannot swear, threaten to illegally harm you or your property, threaten you with illegal actions, or falsely threaten you with actions they do not intend to take. They also cannot make repeated calls over a short period to annoy or harass you.
Debt collectors cannot make false or misleading statements. For example, they cannot lie about the debt they are collecting or the fact that they are trying to collect debt, and they cannot use words or symbols that falsely make their letters to you seem like they’re from an attorney, court, or government agency.
Debt collectors cannot call you at unusual or inconvenient times or places. Generally, they may call between 8 a.m. and 9 p.m., but you may ask them to call at other times if those hours are inconvenient for you.
Debt collectors may send you notices or letters, but the envelopes cannot contain information about your debt or any information that is intended to embarrass you.
Examples Where Your Credit May Have Been Wrongfully Damaged
You may be able to sue for credit damaged by:
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Contact The Creditor Directly
Contact the creditor that furnished the incorrect information, and demand that it tell the credit reporting agency to remove the data from your report. You can use Nolo’s Request to Creditor to Remove Inaccurate Information or write your own letter. If you get a letter from the creditor agreeing that the information is wrong and should be deleted from your credit file, send a copy of that letter to the agency that made the flawed report.
If you already contacted the creditor directly, it doesn’t have to deal with this dispute again unless you supply more information. But if you escalate your complaint, like to the president or CEO, because you believe the dispute was not properly investigated, and you demonstrate a strong basis for your belief, the company is likely to respond.
If the company can’t or won’t assist you in removing the inaccurate information, contact the credit reporting agency directly. Credit reporting agencies have toll-free numbers to handle consumer disputes about erroneous items in their credit files that aren’t removed through the normal reinvestigation process. Go to the Equifax, Experian, and TransUnion websites to find contact information for these three nationwide credit reporting agencies.
What Happens To Unpaid Debts When A Lawsuit Is Filed
When you can no longer make payments on your debts, the creditor will attempt to collect on the balance. It will probably email or text you, or send you a letter. Also, as soon as you start missing payments, the creditor will start to call the number on file. Once you are more than three months past due, it may hire a debt collector or law firm to collect the debt. It also can sell the debt to a national debt collector.
The odds are after you miss several months of payments, the creditor will sell the debt to its favorite debt collection company. Your account will say it was charged off and it will lower your credit score. The debt collector who bought the debt will try to collect what you owe. If you do not respond to the collection actions, a lawsuit could be filed against you. Unpaid debts will not go away. It will be noted on your credit report and damage your credit, and you could be sued.
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But Judgments Can Still Impact Your Creditworthiness
Even though you wont find a civil judgment in your credit report from Equifax, Experian, or TransUnion, having a judgment against you can still impact your ability to qualify for a new credit account.
Notably, when the big three credit bureaus stopped including judgments in credit reports LexisNexis, a specialty credit bureau, started selling a liens and judgments report to creditors. The company was already supplying this information to some of the bureaus and had a system in place for collecting and updating public records. As a result, a creditor can still easily find and use this information when considering your application.
For example, if you apply for a mortgage, the lender can request your three consumer credit reports from the big three bureaus, credit scores based on those reports, and the liens and judgments report from LexisNexis. The lender can then make a decision based on all this information, plus everything you provided in your application.
However, creditors do need to pay for extra credit reports or scores. If you apply for a smaller loan or a credit card, the creditor might make a decision based on one credit report and score rather than gathering all as much information as possible.
Analyzing Your Credit Report
Do Insurance Scores Work
According to a lot of the bean counters, your credit report data can predict whether or not you will file a claim on your auto or property insurance policy. They contend that if you are careless in the handling of your finances, you may be the same way with the way your drive your car, take care of your home, or take care of your health. Regardless of why it is predictive, it has been proven to be, in fact, predictive.
The use of insurance scores to determine rates and whether or not to issue you an insurance policy, has been an ongoing battle between consumer groups, politician and the insurance industry. The Federal Trade Commission filed a report titled, “Credit-Based Insurance Scores: Impacts on Consumers of Automobile Insurance.” The results of their study were that credit-based insurance scores were in fact effective predictors of risk in insurance policies, and were predictive of the number of claims a consumer would file. Bottom line, the FTC felt using insurance credit scores would assist the insurance companies in making decisions faster and cheaper thus passing this savings on to its customers.
Most state legislatures feel credit should not be tied to insurance rates, fees, underwriting or issuing policies. Some states in fact restrict the using credit reports as the sole tool to assess risk and whether or not an insurer can deny someone an insurance policy.