I Paid My Judgment – Now What?

You have been dealing with this monkey on your back for a long time. You fell way behind on a credit card or other loan. Eventually it went to collections.

When the agency could not get the amount of money it wanted from you, it took you to court and obtained a judgment against you. This judgment gave the collection agency the legal right to put a lien against your house, garnish your bank account and garnish your wages.

During this long process, you were able to start saving some money. Perhaps you found help from a family member, friend or coach who worked with you to take control of your finances. Somehow you created a plan and worked it. You finally had the money to pay off the debt!

So what happens now? Do you need to file something with the court? Do you need to notify the three credit bureaus? Does the collection agency have to do anything?

The collection agency must file a Satisfaction of Judgment with the court.

This is not something that you should have to do. It is the responsibility of the collection agency (aka the judgment creditor) to do. And he has a specific amount of time to do this by law. Each state has its own timeline which you can find from your court. For example, the state of Utah requires the Satisfaction to be filed within 28 days of full payment.

If the judgment creditor does not file the satisfaction, you can file a motion with the court to have the Satisfaction entered for you. You will need to provide the court with proof of full payment.

Here in Idaho, if the judgment creditor does not file the Satisfaction and you are somehow damaged, the law allows you to sue for those damages. Perhaps you were denied a loan or a rental application. After all you did pay off the judgment so the world needs to be able to see that in your court record AND in your credit report.

Your state may also allow you to collect a penalty from the judgment creditor for failure to file the Satisfaction. California law allows you to collect any damages plus $100. If the judgment creditor demands you do something more than paying in full to get him to file the satisfaction, then the penalty increases to $250.

Credit reports contain some public record filings. Judgments are one of these. The credit bureaus automatically pick up any judgments as well as satisfactions of judgment.

Your credit report will show the judgment for seven years from the filing date. It will report the judgment as “Satisfied” when it picks up the satisfaction notice from the court’s records. You want to ensure the satisfaction notice is filed so your credit report is accurate.

When you pay off your judgment, be sure to check with the court a couple of weeks later to ensure the Satisfaction of Judgment has been filed. The collection agency is supposed to do this and usually they do. But if they don’t you now know how to determine the time frame for your state and what to do if the agency does not do its duty.

If I Have Moved, Which State’s Statute of Limitations Applies To Me?

(Disclaimer: I am not an attorney. Do not accept this as legal advice.)

I do not know about you, but I have lived in three states since I obtained my first credit card. Since moving out of California three days after graduating from high school, I have lived in Oregon, Washington, back to Oregon, back to Washington, back to Oregon again and then finally to Idaho.

I imagine many of you have lived in multiple states during your adult life.

When you miss your first credit card payment (or any other debt), two things happen. First, when you reach thirty days late, the credit card issuer reports you as 30 days late to the credit bureau(s) it belongs to.

Second, the Statute of Limitations clock begins to run. The SOL in each state sets the time limit in which a court proceeding can be brought against someone in a criminal or a civil case.

If you never pay that credit card, then the issuer or the collection agency which takes the account over can sue you for the amount up until the end of the Staute of limitations timeframe. For example here in Idaho, a credit card account falls under the definition of a written contract, which has a five year SOL. So if I missed a payment which was due on June 4, 2016, I can be sued for it up to June 4, 2021.

But what if I move during back to Oregon? Oregon has a six year SOL for credit cards. Did I just hose myself for another year? If I was to be sued in Oregon during that sixth year, I would argue the SOL had expired under the Borrowing Statute.

Most states have a borrowing statute law on their books. The borrowing statute allows the court to “borrow” the statute of limitations law from the state where the debtor lived at the time of the debt being incurred. This is designed to prevent creditors and other plaintiffs from “shopping” states to file their lawsuits in the state with the most lenient SOL law.

Back to my scenario, the suit would be filed in Oregon because it has the longer SOL. I would argue in my defense that the debt was time-barred because I had

Lived in Idaho when the debt occurred, and
Oregon’s Borrowing Statute requires the Idaho SOL to prevail.

Of course the final decision would belong to the judge so this argument is not a guarantee! But if you ever find yourself in this situation, check to see if your state has a Borrowing Statute which can be argued in your favor. You just might avoid having a judgment issued against you.

Pay For Delete – Does It Really Work?

When you read the forums on personal finance, debt and credit help, lots of people advise you should demand the collection agency remove your account from your credit report as part of the negotiation. This is called “Pay For Delete”.

In theory this sounds great. Pay less than what you owe and have all traces of this debt removed from your credit report. There are even dozens of sample letters available online to help you work the magic and make the collections account disappear. But how often does it really occur?

It occurs much less frequently than those forum posters make it sound like! According to Allie Johnson at CreditCards.com, only about 10% of collection agencies will agree to a Pay For Delete. So for every successful story of a Pay For Delete there are nine other stories of rejection.

Why such a small percentage of success? Let’s look at this from the standpoint of the credit bureaus and the collection agencies. The collection agencies are paid members of the three credit bureaus (Equifax, Experian and TransUnion). All members of the credit bureaus promise contractually to report accurate credit information. Whether positive or negative data.

If you were a member of a credit bureau and you were considering loaning money to someone, wouldn’t you want to know the whole story about the person wanting to borrow your money?

The credit bureaus expect 100% honest reporting from their members. When a collection agency deletes negative information falsely (technically a Pay For Delete is a lie) it risks its membership being terminated by the credit bureaus. No collection agency wants that to happen.

Then why do some Pay For Deletes occur? The agency needs to collect money to remain in business. They either are splitting whatever they collect with the original creditor (an assigned debt) or they paid money and bought the debt from the original creditor (a purchased debt). In either case money needs to come in to keep the doors open!

So if you have a large debt (say $2000), the agency might risk an angry call from the credit bureaus if you were to pay them $1000. After all, cash talks! But if you have a $100 debt, it is doubtful that any agency would risk its membership if you offer $50 for the Pay For Delete.

Your chance for a successful Pay For Delete can increase if you can prove that you never got the bill. For example if you have a medical bill which was mailed to an old address and you can prove you were at a new address when the bills were sent out, then there is a legitimate reason for the collection agency to delete your account from the credit bureaus once you pay.

Pay For Delete was a popular trade many years ago but is very rarely accepted today. Collection agencies and creditors are required to remove inaccurate data from credit reports. But they are not required to remove accurate, negative data from credit reports.

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