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How to Get a Mortgage Despite Past Judgments or Delinquent Accounts

After months of preparation, packing, and document gathering, you are finally ready to move into your new home. The phone rings and you hear the words that no new potential home owner wants to hear, “I’m sorry, but you do not qualify for a mortgage.” The broker proceeds to tell you that you have a past judgment on your credit report and the mortgage cannot move forward until this problem is fixed.

Many New Yorkers are faced with this frustrating problem while attempting to obtain a mortgage and it is important to know how to move forward should it ever happen to you.

What is a default judgment?

A default judgment is a final decision issued by a court in a case where the defendant has failed to appear in court. The judgment will state how much money is owed by the defendant to the plaintiff. Read more.

What is a delinquent account?

A delinquent account is balance on which a borrower has failed to make at least the minimum monthly payment by the due date.

What are public records?

Public records refer to county, state, or federal materials that are typically viewable by the public. Common examples of public record information that may negatively affect a credit report includes bankruptcies, civil judgments, tax liens, foreclosures and wage garnishment.

Can a judgment be removed from a credit report?

Satisfying a judgment:

If you have a judgment filed against you, it will accrue interest and the judgment creditor is going to attempt to collect on the debt owed. The judgment creditor can do this in a number of ways including wage garnishment or a bank levy. Paying off a judgment is beneficial to your credit health. Once the debt is paid, the status of the judgment on your credit report will be updated to show that it has been satisfied. However, paid judgments can be reported for seven years from the date that they were entered by the court.

Settling a judgment:

Judgments can be negotiated and settled for a lesser amount even if they cannot be vacated. If you negotiate a settlement, ask the creditor or collection agency to agree to file a satisfaction of judgment when you pay the agreed amount. It is important to have every step of the process documented.

Vacating a Judgment:

Vacated judgments are different from satisfied or settled judgments. When a judgment is vacated it is as if the judgment never existed whereas a satisfied judgment simply means the judgment has been paid. A court may vacate or modify a judgment if the creditor has obtained a default judgment but you were unaware of the deficiency in the case or you were unable to defend yourself due to a lack of notice. It is important to act quickly and you must have an acceptable legal and factual reason for such a request.

A vacated judgment should allow for the removal of the judgment from your credit report. In some cases having a vacated judgment removed is as simply as disputing the item with the credit reporting agency and providing a copy of the order to set aside judgment. In other cases it is not as simple and requires you to press the issue with the credit bureaus. Having your judgment set aside or vacated is the only way to have it removed from your credit reports sooner than the “seven years from date filed” date.

Step by Step for Vacating a Default Judgment here!

Contact a Debt Attorney in New York City

Vacating or settling a judgment can be a complicated and confusing procedure. At Lebedin Kofman LLP, we are available to help you through each step of your case. Do not hesitate to receive the assistance you need from our debt attorneys serving New York City!