Question for those who know about the effects of a judgement on credit: A friend is currently involved in a small-claims lawsuit. It isn't about a credit card or a loan, it's a dispute resulting from a business check of hers that a former employee cashed (at one of those check cashing places) that didn't hit the bank until the business' account had been closed. When the former employee found out the check had been returned, my friend reimbursed her in cash immediately (money wasn't a problem, it was just a mistake), but the employee never reimbursed the check cashing joint. Now the check cashing joint is suing my friend, who's arguing that they should be suing the former employee. Of course, former employee can't be reached, so...blah blah blah. She's probably going to lose in court. She knew she was going to have a problem defending herself in court, but rather than just pay this thing she went ahead and let a court date be set, hoping to use the time in the interim to attempt to contact the former employee and get her to take care of it. Anyway, court date is a few days away and she knows she'll probably lose. If she loses, she will pay right away. She just wants to go to court, anyway, in hopes that there's some slim chance that her documentation (she does have a signed receipt by the former employee for the cash) will sway the judge to tell these people to go after the right person. I've told her, though, that she should be prepared to have her credit damaged just because she lost, even if she does pay right away. Am I correct on this? I think I am, but don't want to say something that isn't true. Also, if her credit is going to be damaged regardless, there's not a whole lot of point in rushing to pay, like, the same day or anything...right?
seems to me that by endorsing your friend's check, the fomer employee is obligated to make the check good with the check cashing company. if your friend has a signed receipt that she made the check good, then what makes her think she will lose? the check cashing company needs to go after the employee who endorsed the check ps: i am not a lawyer, just my opinion!
I'm an attorney, and the likelihood in this situation is that the check cashing business is suing the correct party because the check cashing place has "holder in due course" statuts. The employer messed up by giving money to the employee. True, the employee might have been pursued by the check cashing place if the check was bad, but the employer could have stopped that by taking care of the problem at the check cashing place. Now the employer will probably have to pay double (although the employer has an "equitable" action against the employee for "unjust enrichment"--the employee should give the money back). Unless something is bizarre in the law of the state in question (and it probably isn't--this is all UCC stuff), the employer won't win this case in court unless the check cashing place doesn't show up. If the employer can settle it now, they should.
P.S. - Credit won't be damaged unless and until the judgment is recorded (and not merely in the case file). Plaintiff would have to take it to the county clerk's office and pay extra to record the judgment ... but if it's paid quickly they'll have no reason to do that.
Appreciate your input as an attorney. This is all exactly what I thought, anyway. My main question is whether I am correct in telling her that losing the suit will damage her credit, regardless of whether she hands them cash within 24 hours or not. Am I right on this?
Ah, so I am wrong. As long as she pays right away, then, she isn't risking her credit rating by going to court? If that's the case, then I was wrong in what I told her, and I am glad I came here for advice before I got too cocky and know-it-all. Ya learn something new every day, I s'pose. Thanks!
A couple of quick items: I have seen situations where it looked to me like court results that wouldn't customarily have been recorded were showing on credit reports. I don't know whether these items were in fact recorded, but there is some possibility that the mere existence of the case might show up as public record on a CRA report. Nonetheless, if that's the case it's already too late. The key thing is to try to avoid entry of the judgment ... and avoid RECORDING of the judgment at all costs. As for having to "double pay" the check cashing place, I'm assuming that the employee didn't pay them back with the cash. If the employee DID pay the check cashing place, the check cashing place should have given the employee the dishonored check, and the right thing for the employee to do would have been to give it back to the employer. But if the employee is holding the check, only the employee can sue on it. And the employer would have had the equitable defense that she had paid the employee cash! If I'm right that the employee didn't pay the check cashing place, then from the check cashing place's point of view, they're only collecting once. From the employer's point of view, the double payment is occurring because of the employer's mistaken payment to the employee in an effort to make things right.
Re: Re: Judgements & credit This is the correct scenario. It was an honest mistake by a person with little experience in these things. When the employee called and said, "Your check came back," my friend just said, basically, "Oh so sorry...closed the account and didn't realize...here is your cash." She didn't ask *where* the check had been cashed and didn't ask for the check back, figuring the account was all closed out, anyway, and it didn't matter. She just paid the person she thought she owed, and figured it was done with. BUT...I have just spoken to my friend, and now there's an update (I hadn't talked to her in a few days). She did reach the former employee, who now lives in another state. Former employee admitted she hadn't paid the check cashing joint, and frankly just figured they'd come after her. She's willing to pay, but needs "a few days". Now the former employee feels confused as to whom to pay, though. She's afraid that if she pays my friend, she's having to trust that she won't be the next one sued if my friend were actually to win in court. She's afraid that if she pays the check cashing joint and my friend *loses* in court, she'll then owe the $$ to my friend, but she'll have already paid the check cashing place, and she'll have to try to get it back! You following so far? SO...here's what happened: On her own, this former employee decided to send a letter to the check cashing place. She offered to pay them in cash, immediately upon receipt of their response letter, if they would agree to drop the current suit and not sue anyone any more with regard to this check. I am told that she sent this letter to them on Friday, but hasn't heard back. What's your prediction as to what will happen here?
Re: Re: Re: Judgements & credit Your friend will probably lose. There are two different issues here. 1. The check between the employer and the check casher. 2. The cash exchange between the employer and the employee. If you write a check, you have to make good on it as long as the check is cashed by someone who has the authority to cash it. The employer wrote the check. The check was drawn on the account belonging to the employer, but the account was closed prior to the check being depositing by the check casher. It seems as though the check casher is suing the right entity. If I were your friend, I would avoid the court all together and just pay the check casher. I'd deal with the employee later.
I have seen situations where it looked to me like court results that wouldn't customarily have been recorded were showing on credit reports. I don't know whether these items were in fact recorded, but there is some possibility that the mere existence of the case might show up as public record on a CRA report. flacorps ====================== That's because everything at the courthouse is a public record. There are no restrictions on what can or can't be reported only that it be accurate so everything is fair game to report. I had a lawsuit listed once on one of my reports. My real-estate records are public records and as such the CRA can list this information on reports so long as its correct. Same goes for autos and any other info at the court house on me,
Re: Re: Re: Re: Judgements & credit I am sure she's going to lose the case. She does have a reason for letting it go to court, though, and I had forgotten all about this, so I hadn't mentioned it here. The check cashing place is asking for way too much money. They want the check amount, the filing costs, the cost of paying a process server, etc., which is all legitimate and fine. BUT, they also want *hundreds* of dollars for their "time" that they spent "working" on the file, at $10.00 per hour, which she is just supposed to take their word for. Someone at the court already told her that they weren't entitled to this, so I guess she really has to go and fight it. So, I'm sure she will win on *that* point, but then will have a judgement for the correct amount. Which means, I guess, that she's screwed. So, she really had to go to court and couldn't really settle. I'd forgotten about that aspect of it. I feel pretty bad for her. What I was wondering, though, when I asked about predictions on the outcome, was whether anyone thinks the check cashing place will just accept the cash offer from the former employee and drop the suit. If not, why not? Wouldn't they (probably) rather have their cash than just a judgement, which they'd have to collect on?
The big mistake you friend made was paying before getting the check back. What happened to her is one reason why I don't pay unless i get the original check back first. Other reasons are: 1*Forgery 2*Fraud 3*Counterfitting
Re: Re: Re: Re: Re: Judgements & cr Cash offer? The check casher doesn't want the cash offer. They want the THE CASH. PERIOD. In order to settle this, she's going to have to show them some money, already. What's all this talk about? They don't want promises. They want the money. This is like renting an apartment in NYC. The landlord will talk all kinds of crap about your credit and your job and your this and your that, but if you show up with a money order--CASH IN HAND--they will rent to you. The check casher is talking about fees for time-spent, etc. It's all crap. If she met with the check casher and showed them a money order made out to them for a certain amount, I think they will settle. Why is she willing to ruin her credit for possibly YEARS over a few hundred dollars? It's silly, especially if she has the money. What sort of money are we talking about here anyway? __
Re: Re: Re: Re: Re: Judgements & cr Aren't we forgetting something? How much time elapsed between the time the check was written and the time they tried to cash it? ???
Re: Re: Re: Re: Re: Re: Judgements & cr I was talking about the "cash offer" made by the former employee. She can't just "show up with cash" because she lives in another state. Before she can send the cash, she has to have the assurance that they'll drop all lawsuits. Otherwise, what could happen is that she sends the cash and they win their suit against her former employer (my friend). Then she'll owe it to my friend, but will already have sent it to the check cashing place, and will have to try to turn around and get it back from them. And what we're talking about is a check for a little over $400, for which this check cashing place wants over $800. It isn't that this woman couldn't pay it, she just didn't understand the consequences of going to court and losing. She didn't know that if you lose your credit gets ruined, even if you pay immediately after court. And, even though I know it was her mistake, I can understand why she's upset. It's almost extortion. In order to settle, they'll want $800, which is *way* more than they're entitled to. But if she has to go to court to have a judge tell them they're only entitled to the correct amount, she's going to have a judgement for that amount. It's kind of like this: I owe you $100, so you sue me for $500. My choices would be to pay you $400 extra that you aren't owed or argue in court that I only owe $100. If I do that, though, my credit will be damaged. I'm screwed no matter what I do. She's only just now beginning to understand the reality of this, and is very unhappy to know that she may have to settle with these people in order to save her credit. Doing that would mean they get nearly twice what they're really owed. In the end, she's not only doubel-paying for this check because of her mistake. She almost triple-paying. The $400-and-change check is going to have cost her over $1200.
Re: Re: Re: Re: Re: Re: Judgements & cr I'm not 100% sure on this, but the impression I got was that it was a little over a month. I could be wrong, though.
