20 May What Happens to Your Credit When You Have a Judgment?
Have you been notified of a judgment against you? Getting a kiss with a fist from a judge can leave your credit reeling. Receiving these usually happens when you’ve ignored letters and attempts at contact from creditors so you’ll pay them back. So, how do judgements work, how do they affect your credit score, and what can you do about them?
Read on for all these answers and more!
How do judgments work?
A judgment is merely a decision from a court that is now on public record (it can be found on background checks and your credit record). It happens when someone files a lawsuit against youand you don’t fight it– a default judgment will be issued, which also happens if you lose the lawsuit.
What happens after I find the judgment?
You don’t just wake up to a judgment like some sick Christmas present. You’ll receive notice of the lawsuit and a period you can file a complaint or fight it.
I wasn’t notified of the judgment
It could be possible that a creditor served you incorrectly or not at all. You might even have gotten the lawsuit papers and thought they were yet another letter from the creditor.
What happens to my credit when I receive a judgment?
Judgments affect your credit score atrociously: they lower your score, the defining mark of whether you are trustworthy with credit. This usually means you’re very unlikely to receive loans unless they’re from one of those sketchy payday loan companies with 40% interest rates. An abysmal credit score could also affect your options beyond finances, like whether a landlord decides to rent your property and whether you receive optimal insurance premiums.
What can I do about it?
Pay up. That’s the only way to rid yourself of this ugly defining mark. It’s okay if you can’t pay up in full right away. You could try to negotiate with creditors or work with a financial advisor to create a payment plan/ budget.
How to get rid of judgments
Here are 4 foolproof ways to get rid of judgments:
- Pay up in full
- Collaborate with your creditor to settle the debt or create a payment plan
- Allow the creditor to seize assets to pay off the debt
- File for bankruptcy to get rid of the debt
Beware that filing for bankruptcy will totally destroy whatever credit you have left. If you’d like, you can find a more detailed description of negotiating with creditors in our blog post entitled Can I Negotiate With A Creditor To Have A Judgment Removed?
What do I do to fix my credit after I’ve paid up?
After you’ve paid off the judgment-causing debt, you can dispute the judgment with the credit bureaus to up your credit score. This process is called credit clearance.
How does credit clearance work?
Welcome to Cape Town Legal Consultant’s area of expertise! Here’s how credit clearance typically works:
- You’ll give us paid-up letters from creditors and personal information– namely your ID and credit score.
- We’ll submit this to the bureaus and wait for their verdict.
- If they reject your dispute, we will escalate it to the credit Ombudsman.
- When the dispute is fixed, your credit score will go back up.
After the dispute, you should focus on building your credit for at least three months before applying for more credit.
In summary, judgments drag down your credit score by a lot. The only way to get rid of it is to pay everybody back in full, and then dispute the judgment with the bureaus using evidence you’re no longer indebted.
If you need help with credit clearance, be sure to contact Cape Town Legal Consultants. We’re glad to be of service.