What happens to the legal judgment when the debt is sold off?

[WickedCommonSense]

Jurisdiction

Virginia

This has been so confusing! So, trying to get an equity loan. Title company put a stop on it for now because of a very old judgment that came up on property records search. I sort of get it, but the lender is sort of being obtuse on this. In VA, there is $25k equity protection and the judgment is only $2800. Anyway, they say they want me to provide proof of satisfaction or closure. Not that it needs to be removed with the courts, per se, but the first step in that regard.

The judgement is 15 years old. It was Unifund CCR Successor to Citibank, so already a junk debt. We were young, stupid, + broke and got a default judgement. They hired an aggressive law firm to collect, but at the time we were fairly judgement proof. In fact still are.

We have not had any communication from Unifund or their hired law firm collectors for nearly a decade now. No letters, calls, nothing. We have lived in the same house for 20 years.

I contacted the law firm to see what we could work out and they said it was closed out in their office and I'd need to contact the original creditor, Unifund. I haven't done so yet.

I was searching my scanned documents archive and actually came across a single document from a smaller law firm collections that says the following:

You had a CITIBANK SOUTH DAKOTA NA account with account number "XX" (It has the correct number). The current creditor to whom the debt is owed is River Heights Capital, LLC.

So, I get that Unifund sold this down the river for pennies. That being said, the title company is looking for the satisfaction from the Plaintiff. How can I even get that? How would I ever get this removed from the public record? It has long since been off the credit reports. If Unifund has sold the debt, what happens to the actual judgment? Surely the court wouldn't accept a satisfaction letter from a Joe Blow small law firm saying it is satisfied? Not sure what to do here.

 

[flyingron]

The lender is under no obligation to lend to you if you have unpaid judgments. The "equity protection" means absolutely squat as it protects YOU not the new lender.

Just because you defaulted on the loan doesn't make the security (lien/mortage/etc...) disappear. The new lender doesn't want to be in second position and I don't blame them. The fact that you're "judgment proof" now is all the more reason NOT to lend you any money. The lenders aren't stupid.

 

[WickedCommonSense]

The lender is under no obligation to lend to you if you have unpaid judgments. The "equity protection" means absolutely squat as it protects YOU not the new lender.

Just because you defaulted on the loan doesn't make the security (lien/mortage/etc...) disappear. The new lender doesn't want to be in second position and I don't blame them. The fact that you're "judgment proof" now is all the more reason NOT to lend you any money. The lenders aren't stupid.

Here's the thing. I don't mind paying it. I get it and this was't really my question though I appreciate the response.

I should have clarified why we are judgement proof when it comes to this matter. The judgement is only in my wife's name. We are not in a community property state. She has also been a stay at home mom with the kids for 15 years. Can't levy our bank account bc it is all of my earnings (they tried many many years ago), no wages to garnish. The house is only in her name (she bought it before we were married and we never got me put on the deed, should have though). That is really what I was referring to. Trust me, I wasn't bragging as in they can't touch us type of thing.

As mentioned, I really don't have a problem settling this debt so we can move forward. That being said, my question was what happens to the legal judgment when the actual debt has been sold. Does the new creditor have the same legal enforcement as did the original creditor? I know that if a creditor hires a 3rd party to collect, but still retains the ownership of the debt, then the collector does have enforcement authority. What about when the debt is sold completely to another party, as has been done in this case?

I guess to put it simply - in this situation who exactly has the authority to remove the legal judgement lien? It seems that Unifund can no longer collect on the judgment as that is illegal under the FDCPA since they sold the debt, I am 100% sure of that fact. I just want to settle with the proper place and not pay off someone who cannot remove the lien. I hope that makes sense.

And I agree and understand I have no right to a loan. We are very well qualified otherwise. $150k household income, both with median credit scores over 800, I just have to co-borrow on the equity line because my wife has no actual income.

 

[adjusterjack]

my question was what happens to the legal judgment when the actual debt has been sold. Does the new creditor have the same legal enforcement as did the original creditor?

Yes.

What about when the debt is sold completely to another party, as has been done in this case?

The judgment is the debt. The debt is the judgment. The new owner of the judgment has all the rights of the former owner. That's why he bought it.

who exactly has the authority to remove the legal judgement lien?

Whoever actually owns the debt/judgment now is where you have to get a satisfaction of judgment and have a lien release recorded.

The worst part is that Virginia allows for a very long judgment life. For judgment liens created prior to July 1, 2021 it's 20 years, renewable for another 20 years.

§ 8.01-251. Limitations on enforcement of judgments (virginia.gov)

Start by contacting River Hights for the current status of the debt. If they haven't resold it they will have to have some sort of evidence of ownership to go along with a satisfaction of judgment and lien release.

One more thing. The debt 15 years ago was $2800. It's likely to be a lot more than that with accrued post judgment interest. The debt could have grown to 2 or 3 times that amount.

You'll have to find out what the interest rate was at the time the judgment was entered. You may be able to find that in the court case file.

 

[adjusterjack]

Sorry, I had to delete your other post because it was essentially a duplicate of this one. Please keep all your discussion in this thread and don't open any new ones.

If you have additional questions or information, add it to this thread.

 

[WickedCommonSense]

Yes.



The judgment is the debt. The debt is the judgment. The new owner of the judgment has all the rights of the former owner. That's why he bought it.



Whoever actually owns the debt/judgment now is where you have to get a satisfaction of judgment and have a lien release recorded.

The worst part is that Virginia allows for a very long judgment life. For judgment liens created prior to July 1, 2021 it's 20 years, renewable for another 20 years.

§ 8.01-251. Limitations on enforcement of judgments (virginia.gov)

Start by contacting River Hights for the current status of the debt. If they haven't resold it they will have to have some sort of evidence of ownership to go along with a satisfaction of judgment and lien release.

One more thing. The debt 15 years ago was $2800. It's likely to be a lot more than that with accrued post judgment interest.

You'll have to find out what the interest rate was at the time the judgment was entered. You may be able to find that in the court case file.

Ok. THANK YOU for this information. I was finding literally zero information on this anywhere. Honestly, as crazy as it sounds, besides getting proof it was written off (not likely, of course) this is probably the best situation. As I mentioned, I am willing to pay/settle. Kinda sucks, for sure, but life lesson and a stupid tax. I was more concerned with being unable to find out who I need to pay who can legally also actually get it taken off. I am not super concerned overall with getting screwed per se. If I pay someone who claims they are valid owner and are not, I am sure I can sue them, just would rather avoid this completely and it would take far more time.

The duration isn't so much of a concern really as I am going to pay it and you are right, it is more than $2800. It was at 6% interest, so it's a big hit (again, stupid tax) and is around $5500 now. Doesn't compound in VA, only per annum on unpaid principal balance. I think this is the "trade-off" for the long judgement life. I will be OK with paying the full amount if for nothing than other to just get out from under it and move on with life, BUT I will at least try to negotiate for a little less. I really have no power in the situation of course. Considering they paid probably 4 cent on the dollar, someone is gonna get a payday on this one. We shall see. Again, I really appreciate the response!

 

[adjusterjack]

besides getting proof it was written off

"Written off" is an accounting thing that gives the creditor a tax deduction for a bad debt. The debtor still owes the debt and if the debt is ever paid, the creditor just reverses the accounting entry and pays the tax on the income.

I will at least try to negotiate for a little less.

You should. There's no way to predict what the reaction to a discounted cash offer will be.

 

[WickedCommonSense]

Sorry, I had to delete your other post because it was essentially a duplicate of this one. Please keep all your discussion in this thread and don't open any new ones.

If you have additional questions or information, add it to this thread.

Yeah, so I was wondering where that one went, I couldn't find it! I was trying to find it to delete it (if I could!). I learned some new info and was able to ask more specifically here. Glad you deleted it so nothing gets confused.

 

[WickedCommonSense]

"Written off" is an accounting thing that gives the creditor a tax deduction for a bad debt. The debtor still owes the debt and if the debt is ever paid, the creditor just reverses the accounting entry and pays the tax on the income.

Huh, while I misspoke in my chosen words, I did basically mean what you thought I did. This is interesting to know. Learned something new. It makes sense though. This is partly why I have resolved myself to pay it. I can now afford it, and I did owe the original amount and was initially aware there is essentially penalty interest. Once it fell off the credit report, long ago, it was easy to forget about. Let this be a lesson to anyone who comes across this earlier on in a judgement...this is proof that it literally never goes away, well depends on the state. In VA, initially lasts 20 years (now 10 for anything after 7/2021) but can basically be renewed indefinitely. At least that is how it used to be in VA. That may have changed also in 7/2021.

You should. There's no way to predict what the reaction to a discounted cash offer will be.

Literally can't hurt to try in this situation. Though, to anyone with a second of thought, it is super suspect that I suddenly am contacting them after 15 years simply because I want to do what's right ! If I wasn't in the situation I am in...in other words working against time. I need this HELOC to close in 3 weeks, so my negotiation will only go so far really. (Note, I know the lien won't clear in 3 weeks, but the lender just wants proof it's paid and, thus, will be cleared.

That brings up another question - does the FDCPA or other statute require a timely removal of judgement?

EDIT: Found it:

§ 8.01-454. Judgment, when satisfied, to be so noted by creditor.
In all cases in which satisfaction of any judgment so docketed is made, which is not required to be certified to the clerk under § 8.01-455, it shall be the duty of the judgment creditor, himself, or by his agent or attorney, to cause such satisfaction by the defendant, and if there is more than one defendant, by which defendant it was satisfied, to be entered within 30 days after the same is made, on such judgment docket. If the judgment has not been docketed, then the entry shall be made on the execution book in the office of the clerk from which the execution issued. For any failure to do so within 90 days, or after 10 days' notice to do so by the judgment debtor or his agent or attorney, the judgment creditor shall be liable to a fine of $100 and shall pay the filing cost of the release. The entry of satisfaction shall be signed by the creditor or his duly authorized attorney or other agent and be attested by the clerk in whose office the judgment is docketed, or when not docketed, by the clerk from whose office the execution issued; however, the cost of the release shall be paid by the judgment debtor. For any money judgment marked as satisfied pursuant to this section, nothing herein shall satisfy an unexecuted order of possession entered pursuant to § 8.01-126.

$100 dollars, wow. Doesn't seem that punitive to be honest. Should be $100 a day. There has gotta be some motivation, right?

 

[Zigner]

IF you can track down the owner of the debt, then you may be able to arrange for the debt to be paid out as part of the HELOC. In other words, you would start with a balance of $whatever, but the judgment would be paid.

 

[adjusterjack]

IF you can track down the owner of the debt, then you may be able to arrange for the debt to be paid out as part of the HELOC. In other words, you would start with a balance of $whatever, but the judgment would be paid.

The lender may even prefer paying the debt out of escrow.

 

[doucar]

The lender may even prefer paying the debt out of escrow.

And then the escrow company will be responsible for determining who owns the debt.

 

[WickedCommonSense]

The lender may even prefer paying the debt out of escrow.

Good point. He did mention something the other day when talking to him that we could "pay it out of the line". I was in the middle of a sentence and caught it, but didn't bring it back up because he still keeps asking for proof of payment. There may be an assumption here that it has been paid already (which I never told him). Considering I will technically be using the line monies to clear it up anyway, this is less steps. I am getting a cash advance on a 0% interest CC and using it just until I get the equity line and then pay it off on the card. Paying in escrow would save that step, though I'd loose some CC points! I'll see what he says after I confirm who actually holds the debt now.

 

[WickedCommonSense]

Contacted the debt holder and they directed me to the law firm I last had a statement from in September of last year. They were nice, but wholly unwilling to negotiate in any way. I went ahead and paid it off and am done now. I did ask specifically about if River View would be filing the satisfaction of judgement and he said they'd (the law firm) would actually do it on their behalf. I suppose this happens all the time, so it will get removed one way or the other. In any event, I have proof of payment to get it rectified if there are any problems. Thanks again for the assistance.

 

[adjusterjack]

You're welcome. Glad it worked out for you.