A default judgment means you’ve been sued in a court of law and either failed to respond or appear on your court date. Thus the judge had no choice but to award a default judgment against you.
It’s outstandingly common for debt collectors to pursue judgments against consumers, with a reported 90% of all lawsuits by collection agencies resulting in a default judgment. This is for a variety of reasons, but a judgment carries dire consequences.
Not only can your wages be garnished, liens placed against you and your property, bank account levies, and even asset seizure be used for repayment, depending upon your specific state’s laws. Moreover a judgment on credit report files is one of the most damaging listings to have.
It’ll virtually destroy your credit score overnight and there’s consumer reports claiming they’ve seen a 200 point drop in their credit score because of a judgment. If you’re suffering from a default judgment there are actions you can take to fight this, settle the debt, and erase it from your credit history.
In fact many consumers aren’t even aware a judgment has been entered against them and they’ve only discovered it because their wages are being garnished. There’s four ways to recover from a default judgment.
The first is to request the court set aside the judgment and provide you an opportunity to defend yourself, the second is to settle the debt. The third method is to file bankruptcy and the fourth is to take action to fix your credit.
1. Set Aside Default Judgment
In this step we’re essentially filing an appeal and this will require you to file a motion to vacate judgment with your local small claims court. This will require you to pay a nominal fee and the sooner you file this paperwork, the better you’re chances will be.
You’ll need a good viable reason and claiming financial hardship or simply negligence, isn’t a valid reason to set aside the judgment. There’s a number of common reasons to request the court to vacate your judgment including:
- You weren’t properly notified of your court date.
- Mistake, surprise, excusable neglect.
- Judgment is void.
- Judgment has been satisfied, released, or discharged.
- Newly discovered evidence.
- Any other justifiable reason for release of the judgment.
It’s mission critical that you act fast and file your motion to vacate at your earliest convenience. When you submit your motion, you’ll typically be assigned a court date where you can present your case directly to the judge. Your judgment creditor, the company that sued you, will be notified of your motion.
At your hearing you’ll need to present your case to the judge, this includes why you didn’t respond or appear at the original hearing, along with your defense for the lawsuit. This is also where you’d share you weren’t properly notified with a court summons, if those are your circumstances.
If the judge agrees with your arguments or the plaintiff consents, then the judgment will be vacated. This will release your bank accounts and any wage garnishments.
However you’ll often still be required to defend yourself against the original lawsuit. You see, we’ve only appealed the default judgment and this is why you’ll need a valid defense, to fight the lawsuit.
Warning if you’ve been sued by one of the big collection agencies such as Midland Funding LLC, they’ve openly admitted to filing fraudulent affidavits. In fact one former employee testified that he’d personally signed up to 400 affidavits per day.
This is the evidence used against you and many debt collectors have been investigated by the Federal Trade Commission (FTC) and in addition to many state’s attorney general. One of the other sneaky debt collection tactics is to re-age consumer accounts.
In other words, it’s very smart to investigate the statute of limitations on your alleged debt. Generally it’s about seven years and this is the legal time frame for which you are responsible for payment. After this time window expires, you’re no longer legally responsible for payment.
The statute of limitations applies to most types of consumer debt including: medical collections, charged off accounts, repossessions, utilities, and many more. There are very few few exceptions such as defaulted student loans.
2. Settle The Judgment
If this is a legitimate debt and the company that’s sued you has followed proper procedure, we’ll next need to negotiate a settlement. If you aren’t in financial straits and have the ability to pay all or even a portion of the judgment, you’ll frequently be able to negotiate to settle the debt for less than the total.
However if you need make payments over a period of time, they’ll be much less likely to accept a settlement for substantially less. This is because they’ve already jumped through the hoops to get a judgment against you, and now have the legal resources to make life miserable for you.
3. File Bankruptcy
Obviously, we want to avoid filing bankruptcy because this places you in a prison of bad credit for 10 long years. However if you’re dealing with overwhelming debt, then this may be the only viable option.
Please, know that many of the most successful entrepreneurs in American history have risen up from the depths of a bankruptcy including: Walt Disney, Conrad Hilton, Sam Walton, William Fox, P.T. Barnum, and many more. The leading cause for people to file bankruptcy, which may come as a surprise to the Obama administration, is medical debt.
One of the few direct results of free health care for all, has been a sky rocketing of deductibles for everyone. In other words, medical related debt in collections has surged and will continue too, as a result of our government’s wishful thinking. Big surprise.
4. Fix Your Credit
Now a judgment will remain on credit report files for seven years from the date of filing. And it’s true the maximum amount of time an item can remain on your credit report is for seven years, except for a bankruptcy which is 10 years.
But did you know there is no minimum amount of time any item must remain on your credit report? In fact you can legally remove any item from your credit report before seven years, if it’s unverifiable. This is in accordance with the Fair Credit Reporting Act (FCRA).
This legislation enables you to dispute credit report items that you believe are questionable, inaccurate, or made in error. This is how to get a judgment removed from credit report files and and any other negative, derogatory, and damaging listings.
Your credit score is much like your Grade Point Average (GPA). It matters not if you’re acing all your classes, except your failing underwater basket weaving your GPA is going to get smashed to smithereens. This applies to your credit score too, the negative items are the cause of a low credit score.
In our brave new world your credit score is the most important piece of information about you. Not only does it impact every aspect of your lifestyle, one of the emerging trends is for employers to check your credit, before offering you a position.
Avoid being one more of the many victims of aggressive debt collectors, lenders, and creditors and take action to repair bad credit. We encourage our members to consider professional, legitimate, and legal credit restoration companies to help.
They’ll work with you to clean up credit report negatives, errors, and misleading derogatory information. In just 2016, over 9 million negative items were successfully removed from consumer’s credit reports.
Get a free credit consultation with a certified FICO professional today by calling toll-free 1-877-418-7596. And for more tips, techniques, and strategies to fix credit score with Dan Willis, sign up for our free newsletter and join our congregation.
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