Dear To Her Credit,
I repaid an account that had been sent to a collection agency. The agency placed a judgment against me. After I paid it off, I tried to get the judgment removed, but the agency must be out of business, because I can no longer locate them. I have all my receipts. Do I have any options?
You have two issues with this judgment. First, you need to have the judgment legally removed. This is also referred to as vacating, canceling or rescinding an order of judgment.
"The fact that the collection agency has gone out of business does not change the fact that a debt is owed to the company that the collection agency was working for," says bankruptcy attorney John Hargrave of Barrington, N.J.
You can have the judgment removed in one of two ways, according to Hargrave. You can determine who the plaintiff was in the lawsuit against you. The plaintiff was probably not the collection agency. Your judgment paperwork should tell you the name of the plaintiff, who you can contact and ask to provide you with proof the judgment was paid and a cancellation of the judgment.
Alternatively, you can do a judgment search on yourself. There has to be a judgment of record. This will likely show the name of the law firm that filed the lawsuit on behalf of the creditor. In this way, you learn their name and now know someone who has the authority to remove the judgment if you prove that it was paid. You can use an Internet search company, such as charlesjones.com, to do a judgment search.
"If neither of those approaches is successful, then you will need to hire a lawyer to solve the problem," says Hargrave. "My recommendation would be to file a motion in the court where they obtained the judgment asking the court to enter an order canceling it based upon the full payment."
Contact the firm and provide them with proof of payment and a request that they cancel the judgments.
Your second step is to make sure your credit report is not damaged more than necessary. You should not be stuck with an unpaid judgment on your credit report just because the company that put it there is out of business.
In fact, due to the Fair Credit Reporting Act, the fact that the company is no longer able to respond may work in your favor. You may be able to not only have the judgment reported as paid, but the judgment may be removed from your report altogether.
When a person disputes a debt by writing to a credit bureau, the credit bureau must follow certain procedures. By law, the credit bureau must remove the item from your credit report and then send a report to the creditor, giving it a certain amount of time to verify the legitimacy of the information. "Assuming the collection agency is out of business, then it is likely no one will respond to the request for verification," says Hargrave. "In that case, the disputed item does not go back onto the credit report."
If, due to various roadblocks, you are not successful in having the negative mark removed because of nonresponse from the collection agency, the paid debt will generally stay on your report for seven years. However, a paid debt is far less damaging than an unpaid one, and it becomes less of an issue every year that goes by.
See related: Can debt judgments follow you overseas?