A few judgment questions I'm helping my son clear up the last few negatives on his credit. My son has a default judgment against him filed at the end of 2003 from one of the major credit card companies. The underlying debt was sold to a CA somewhere around 2007. The judgment is from Utah, he's lived in Texas since 2004. I've been in discussions with the CA about a possible settlement--well actually, they've agreed to let me purchase the debt from them if we can come to an agreement on terms. I'm trying to get more info so I can better decide what I'd be willing to pay the CA to get rid of this debt. Questions: 1) I know Utah's judgments are good for 8 years, and I've read somewhere(no idea if it's accurate) that they're able to renew the judgment one time if they can show that the debtor has the capability to pay the debt???? Does anyone know more about renewing judgments in Utah? 2) I haven't been able to find much information on purchasing the debt as opposed to settling. Are there any gotchas I need to consider? I have a couple other questions but I'll leave it at these two for now. Appreciate any help I can get, Thanks
You're right, UT's judgments are good for 8 years, and I'm fairly certain they can be renewed as many times as it takes for the creditor to collect on the debt. Why would you want to consider purchasing vs. settling the debt? I've never heard of this working, so I'm interested to know exactly what they are offering you?
Be careful here. You want to purchase the judgment itself, not the debt. Purchase the debt and the judgment still remains on your son's credit reports plus they could easily still go to court and proceed to collect on the judgment. Maybe they would do that and maybe they wouldn't do that. There are such things as judgment recovery specialists. The way they normally work is to purchase the judgment for some small amount, say $10 or $20 plus 50% of whatever they collect. They have to purchase the judgment itself in order to become the original creditors and thereby escape FDCPA requirements as well as escaping the problem of getting hit with unauthorized practice of law in most states. Judgment recovery specialists almost never directly contact the debtors directly but work almost exclusively through the banks and through wage garnishments. You won't be able to buy the judgment on those kinds of terms but you should be able to buy it for maybe 50 to 80 cents on the dollar max. But work to buy the actual judgment so you can file a satisfaction of judgment with the court. As original creditor you may also be able to file a motion to seal the record thereby fixing it so the credit bureaus can't find the record then have your son dispute the judgment with the credit bureaus. That should get rid of it if you are able to get the judgment record sealed at the courthouse. If you can't figure out how to file such a motion you may have to hire an attorney to do it for you. But buy the judgment and therefore the collection rights as well. Don't just buy the debt.
Well the CA doesn't know that there's a judgment, so the thought was to buy the underlying debt and therefore be able to either file a cancellation of the judgment or somehow else get it removed. Now I'm confused, how can someone "own the judgment" if they don't own the underlying debt. If company A has a valid claim against a debtor and receives a judgment, then sells the claim to company B -- doesn't company B then have rights to the judgment if he files the paperwork with the court showing his ownership to the underlying claim? In this particular case, I'm not too worried about the judgment as my son's only income and assets are exempt in Texas. His bank accounts are always pretty minimal. The CA has come down to about 10% (on a 10,000 original debt that's now up to 20K or so) -- I'm still holding out at about 5%. But if the rights to the judgment wouldn't inherently be attached to this--I won't even bother purchasing or settling. Hmmm, I'll have to get more specific advice concerning the rights to the judgment via the underlying debt.
Also, from further investigation it looks like that in Utah, a judgment can be renewed once, but it's not automatic--it's basically like filing an entirely new claim. You need to serve papers on the defendant and it proceeds like an original lawsuit. Still trying to clarify exact details and trying to find out how often these judgments are renewed.
If a judgment has been issued against your son on that debt then the debt has been reduced to a judgment. Yes, I know that sounds so simplistic as to almost be an insult to your intelligence but it is important to understand that concept. So the question becomes one of whether or not the collector is trying to collect on the debt or on the judgment. In order to know that you have to know who owns the judgment now. The debt collector might not even know that the debt has been reduced to a judgment or might be trying to enforce the judgment. Now then time for another of those DUH type statements. If you pay the debt collector and the debt collector don't own the judgment or have the right to collect on that judgment and you pay the debt collector the judgment owner would still have the right to enforce the judgment. You would then end up paying twice for the same debt. So let us suppose you pay the debt collector who don't own the judgment. I hope you aren't so naive as to think the debt collector will give you a paid in full receipt for your money because if you trust them far enough to give you a receipt after you pay them you just might be in for a nasty surprise. It isn't likely because debt collectors normally won't give receipts. They often promise to do so but then renig on their promise once paid. Even if you do get a receipt and the judgment owner comes after your son he has no defense because the judgment owner will simply say something to the effect of TOUGH LUCK! I haven't been paid and I have a judgment that is enforceable and if you don't pay me I will haul you into court and force you to pay me. It could get really sticky. If I purchase a judgment I have to prove that I own that judgment or I can be charged with unauthorized practice of law and also hit with having to buy a Texas debt collector's license and be bonded and insured. That's not true in most other states. I have to be licensed as a judgment recovery specialist. I'm fully liable under Texas consumer protection law if I'm a judgment recovery specialist but I'm not liable under FDCPA if I own the debt because by purchasing the judgment I have stepped into the shoes of the original creditor. Now then, let me hasten to assure you that I don't live in Texas and I don't try to collect debts or buy judgments. I just happen to know what the law is in Texas regarding the judgment recovery business. I also happen to know that if you pay the wrong person you could end up paying it twice and although you might get an attractive sounding offer from a debt collector the owner of the judgment isn't likely to be so nice. So my best advice to you is to be absolutely certain you are buying the judgment and not just paying some debt collector on confidence that you are dealing with an honest and respectable business. You just might be trying to deal with a modern day version of the biblical Trojan horse. I'd advise going to the court house and see who is the registered owner of the judgment and be sure that you are dealing only with that company and that you get an actual release of the judgment that you can go file with the court. And if you find that the debt collector isn't the registered owner of the debt then I'd recommend you see a lawyer about filing a fraud charge on the clown. I don't know whether you can or not but I sure wouldn't take that kind of potential abuse without a fight.
Another thing to think about is the fact that unless that Utah judgment has been domesticated into Texas where your son lives now it has less value than toilet paper. So if you haven't done so you need to pay a visit to the county clerk and see if your son has any judgments on his record there before you do anything. If your son's public record in his home county shows no judgments on record then I'd tell them to whistle dixie. Regardless of whether or not Utah has a longer statute of limitations there is still a time limit on when a judgment can be enforced in Texas. If they don't bring their domestication effort into Texas within the time frame allotted by Texas law then they may be out of luck. Another problem could arise if they try to domesticate it after the Texas statute has expired on them they could still get it domesticated into Texas if your son failed to respond to the summons properly. He would have to defend or they could get it domesticate regardless of any SOL. You had better do your homework before you shell out any cash or you could be very sorry later.
Wow, thanks for all the helpful information. I'll check with his local county clerk on Monday. I also found out the debt collector, who's been sending him letters since 2007, is not bonded in Texas. I have the means to get an attorney, if it's worthwhile(have 3 in the family, but not their area of expertise). I'll need to think it through, and see what my son wants to do.
About his credit report: He currently has 2 judgments(the one referenced above and one other) and his wife has 1--all in Utah and all stemming from when my son became disabled in '02 and lost his job, etc. The other 2(his and his wife's) are from a furniture outlet, who, from what I've heard, don't negotiate and are difficult to work with. Everything negative on their reports will be cleared in the next few months, except for the judgments. The big one is scheduled to fall off at the end of 2012, the two from the furniture store are scheduled to fall off early 2011. They're hoping to refinance their house next year. 1) How much would these 5-6 year old unpaid judgments hurt their credit score if they're the only negatives? I know it partly depends on how many positive TL they have and age of accounts, etc. 2) Would a mortgage company require them to pay the judgments off that are in a different state? Thanks again for all the information.
That will probably be the killer right there. The rest don't make a lot of difference but most lenders will require that all past debt be paid off before they will loan money. It is possible to find lenders who will lend regardless of all that but they are difficult to find indeed and would want a very high interest rate. Another problem is that paying off those debts will most likely reduce the score a bit because paying them becomes recent collection activity. That's why buying the judgment is important. You might be able to do that whereas he can't. I can buy the judgment too if I know where it is lodged. For instance, I could buy the judgment and maybe for less than you can unless you have led them to believe that you might be willing to pay them off. Then I probably couldn't buy it for a lesser price either. The reason I could buy it is because I have a Delaware corporation. A corporation offering them a solid amount of immediate cash payoff would be much more believable than an individual making inquiries that may or may not come to fruition. A corporation can do lots of things that individuals can't do. Another example is that my corporation can sue someone and get a huge judgment (with their cooperation) and actually garnish their wages. When the employer sends the money to the court and the court pays it to my corporation there is nothing to stop my corporation from buying a postal money order and sending the money back to you. Of course, before you trusted anyone to do that you would want to have a release of the judgment so that in case they cheated you somehow or the corporation went out of business all you would have to do is file the release of the judgment with the court showing that the debt was paid in full and released. The court would then order the garnishments stopped. You would simply show the release order from the court and you would start getting your full paychecks again. Another thing a corporation can do is put liens on your vehicles and your home. If the liens are for about twice what the vehicle or the property. Say you had a vehicle actually worth maybe $5,000 and you had a corporation put a lien against it for $10,000 nobody would try to seize it because they would have to pay that lien off before they could realize any money out of it. They wouldn't even dream of doing that but if they did I'm sure you would be willing to sell that $5,000 vehicle to them for $10,000. Of course, another thing they could try to do out of sheer frustration is send a sheriff out to your home to see what could be grabbed to sell from there. But if you had a rental contract from a corporation showing that you were renting everything right down to the kitchen table they couldn't grab a thing. Now then let me state that I'm not offering to do any of that. I'm just saying it can be done if it is done properly and that only a corporation could get away with it. Private individuals wouldn't stand a chance of getting that done for the simple reason that you can't sue yourself and get a judgment against yourself, unless you happen to own a corporation and know how to set that all up so it is legally and properly done. You would have to hire an attorney to get the judgment first of all and you would have to appear in court to admit to the judgments in most states. It isn't easy but it can be done and that is all I'm saying here. It can be done and it is being done all the time.
