Legal Question in Credit and Debt Law in Pennsylvania

Judgments can stay on your credit report for 7 years from the date of entry. But judgments never go away. They remain in the court records forever. They can be enforced against any real property for 5 years but can be renewed for additional 5 years and can be enforced against personal property (like cars and bank accounts) for 20 years in Pennsylvania. Other states have different rules.

So not paying is not an option unless you never plan to open a bank account or but a home or a car in your own name.

I would be less concerned about your credit report than I would be about the possibility that someday the creditor is going to seize your bank account when you least expect it. If the judgment is in a state other than PA, then I would also be worried about wage garnishment once you get a job. And moving to another state will not be helpful because creditors can transfer judgments to any other state where you live, work or own property.

If you pay or settle the judgment, the creditor will have an obligation to mark the judgment as satisfied. Mortgage lenders do not care that you have a judgment against you so long as it is satisfied.

And the unpaid judgment may hinder you from getting a job or an apartment (it will definitely prevent you from getting a mortgage and buying a home in your name) depending on the type of work that you do. Some of my clients who work in some capacity and have a security clearance have been threatened with the loss of the security clearance or job because of their debts.

As to how you pay the judgment, there are options.

(1) I find it somewhat difficult to believe that you had no knowledge about a lawsuit and judgment until you reviewed your credit report. Lawsuits are commenced by filing a summons and complaint which must be served upon you. If you had no knowledge and there was no service of the complaint, how was the judgment obtained? Were you sued in PA or was the judgment entered in another state? How was service made? Depending on the answers, it may be possible to challenge the entry of judgment. What was this for? A credit card or some other kind of debt? Was this your debt? Again, if this is for something for which you are not responsible, it may be possible to challenge.

(2) Assuming that the judgment is proper, how much is the judgment for and what is the current balance? Judgments earn interest at a rate of 6% if it was entered in PA. Again, what is this for? If for something like a credit card or even breach of an apartment lease, it may be possible to settle this for something less that 100% depending on how much you can pay in a lump sum.

(3) Once you determine that you owe the money, I would get a copy of the court file and see who the plaintiff was in the lawsuit. Is that the same entity as reported on your credit report? Contact the law firm that obtained the judgment for the plaintiff or contact the plaintiff directly. If you can settle for something less than 100% of the debt, get the terms of any agreement in writing - the essential terms would be the case or file number, any original account number, the full balance of the judgment, the settlement amount, when and where it must be paid, and the name of the payee on the check. Get a physical address. And get a statement to the effect that the judgment will be marked satisfied once the settlement amount is paid.

Once you get the settlement letter, get a money order or cashier's check for payment of the settlement amount. Make a copy of it before you send. Send the check/money order and a copy of the settlement letter to the plaintiff or law firm before the due date so that the funds arrive by the due date. Use UPS/FedEx so that you can track the delivery and make sure the funds were received.

In 30 days, follow up to see if the judgment has been marked satisfied and get a final closure letter. Keep a copy of your payment (the check or money order), copy of the settlement letter and copy of the closure letter FOREVER.

Make sure that the judgment is marked satisfied. If the plaintiff has not done this in 30 days, then give them another 30 days. If it still has not been done (check the court file) then you write a letter and demand that the judgment be marked satisfied. There is a statute requiring the creditor to do this. If they still refuse the creditor would be liable for damages and your attorney fees. I have never had a creditor refuse yet.

Once you get a copy of the satisfaction of judgment, you write to all 3 credit bureaus and ask them to update your credit file to reflect that the judgment has been paid. Include a copy of the satisfaction of judgment with your letter.

The credit bureaus have their own people check judgments and not all creditors report to the credit bureaus - judgments are something the credit bureaus do own their own. The credit bureaus should indicate to you if the report has been updated.

Or you can hire me or another attorney to handle this.