- Review how a civil judgment lowers your credit score.
- Consult with an attorney, when facing a legal judgment.
- Try to settle your case, before a judgment is entered against you.
Will a civil judgment affect my credit?
My question relates to a civil judgment and potential impact on my credit score. I was involved in an auto accident and have been sued by the other driver. My insurer has provided me with legal representation and the damages claimed by the plaintiff are small (the dispute centers primarily on the replacement value of his car and the max of the claim is around $5K) and would be well within my insurance coverage amount. I am planning to buy a home in the next few months so I am watching my credit score closely and was wondering if a civil judgment, that is paid by my insurance company, would have a negative impact on my credit score? Thanks.
Having a civil judgment against you will likely damage your credit score, but how much it will reduce your score greatly depends on the other items appearing on your credit report. For example, if you have numerous accounts reporting long positive payment histories, this single blemish on your report should not be detrimental to your credit profile. However, if you do not have a substantial positive credit history to balance out the negative impact of the judgment, your score could drop significantly.
I am glad that you have legal representation in this court case. You should work with your attorney to determine the best course of action available to you under the circumstances. Explain to your attorney that you are planning to purchase a home, and that you are worried about a judgment damaging your credit score. He may decide that settling the case, thereby preventing a judgment altogether, is the best course of action. Also, in some states, if a judgment is paid before it is recorded, it will never become part of the judgment records, and will therefore not appear on your credit report. Once a judgment is entered, you may be able to negotiate with the judgment creditor (the Plaintiff) to file a motion to have the judgment expunged as part of the settlement agreement. These last two options are much more difficult and time consuming that simply settling with the Plaintiff before the judgment is issued. Unless some fact that you do not mention in your question precludes settlement, I think you should discuss settlement options with your attorney before a judgment is entered against you. A judgment will almost certainly damage your credit score, so if a judgment can be avoided through a settlement, I would encourage you to consider that option.
To learn more about credit and credit scoring, visit the of Bills.com Credit Solutions and Resources page. See also the resources Collections Advice and Wage Garnishment and Liens & How to Resolve Them to learn more about your rights and liabilities.
Also, since you mention that you are planning to buy a home, you can read more information at the bills.com Home Purchase page.
I hope this information helps you Find. Learn & Save.
Let's start with the basics. Louisiana is a community property state. See the Louisiana Department of Justice Office of the Attorney General's Louisiana Laws on Community Property and Covenant Marriage (PDF) for a brief description of Louisiana marriage and divorce.
Your question boils down to, "In Louisiana, can a creditor pursue a couple's community property if the debt is pre-marital?" For federal taxes, the answer is easy: The IRS can pursue either your separate property or 100% of the community property owned by you and your spouse.
For judgment-creditors in Louisiana, the answer is found in Louisiana Civil Code article 2345, which states in part, "[a] separate or community obligation may be satisfied during the community property regime from community property and from the separate property of the spouse who incurred the obligation." The Louisiana Supreme Court interprets 2345 to include pre- and post-marital debts (Rayne State Bank & Trust Co. v. Fruge, 546 So. 2d 637, 640 (La. Ct. App. 1989) and Bagwell v. Bagwell, 698 So. 2d 746, 748 (La. Ct. App. 1997)).
Getting back to your question, it is possible that a Louisiana loan officer will ask your husband to disclose your name and Social Security number for the purpose of obtaining a copy of your credit reports. The judgment will likely appear in the Public Information section of your credit reports. If the loan officer does so and has an understanding of Louisiana Civil Code article 2345, he or she will be obligated to include your judgment in your spouse's debt-to-income ratio calculations.
Please ask any follow-up questions you may have on the most appropriate page.
The statute of limitations, or lifetime of a California judgment is 10 years from the date the judgment was entered. As mentioned, a California judgment can be renewed. The judgment gives the judgment-creditor the right, under California law, to garnish your wages, place a lien on your property, or levy your bank accounts. Consult with a California lawyer to learn more details about your rights under California law.
Start by sending the lawyer a letter explaining you were never involved in an accident with the plaintiff, and list all of the names you have called yourself. Tell the lawyer just what you said here: You have no knowledge of this case, the plaintiff's injury, or who the correct defendant may be. Send the letter Certified Mail, return receipt requested, and keep a copy of the letter in the safe place.
The lawyer will have one of three responses: 1. Back off and apologize for the inconvenience 2. Argue with you and say in effect, "No, we really think we found the right Jane Doe" 3. Ignore your letter
If you receive response No. 2 or No. 3, then consult with a lawyer who has civil litigation or consumer law experience immediately.