What next - tried to pay judgment, cannot pay
March 11, 2009 6:47 PM Subscribe
A friend of mine finds themselves in a unique and confusing situation regarding an unpaid debt and a judgment.
- They had a judgment awarded against them for $8,000 and had never received notice. They only found out about the judgment when they applied for a mortgage.
- When they took out their original mortgage several years ago the lender didn't require them to take any action on the judgment and they were able to obtain a mortgage with the judgment still in place.
- They made their mortgage payments on time for two years and wanted to refinance (the original mortgage had a requirement that they had to wait two years to refinance which they met otherwise there would have been a penalty).
- The same mortgage company now wanted the judgment taken care of (paid off) before they would refinance the loan.
- My friend agreed to do that and was able to borrow an additional amount to cover the refinance and the judgment (essentially a cash-out as far as I can tell - except my friend never saw the cash - more below).
- The mortgage company generated a check for teh debt made payable to the county court and my friend mailed it in to the court where the judgment resided.
- At some point later (a few months), the court returned the payment saying that they could not locate the creditor who had filed the judgment.
- The mortgage company did NOT notify my friend.
- After about a year, my friend noticed that the judgment still showed on their credit report as still being due.
- They proceeded to contact the mortgage company and have been getting the run around for 1.5 years. Before they contacted mortgage company they spent quite a bit of time trying to do their own research by repeatedly contacting the County Court. Every time they called the court would be closed or when they were open they would get voice mail. many messages were left explaining what info they were trying to obtain with their contact info. They never heard from the court so eventually they decided to contact the mortgage broker to find out how they could find out if the check had cleared since it was cut by someone other than them.
- Mortgage company keeps asking friend to provide new info for creditor -- i.e. where to send the money.
- Since my friend was not aware of the judgment in the first place, they don't even know who the creditor is/was and they are afraid to attempt to call any of the bill collectors that are sending them collection notices because they are afraid it will cause a statue of limitations to be reset. Apparently where they live, Colorado, the statue of limitations is seven years and they believe that if they don't have any contact with the collection agency that the debt will go away after seven years. Whether that is true or not I don't know.
- So my friend is stuck in limbo. The mortgage company has the $8,000, my friend has been paying interest on the $8,000 (in addition to the rest of their mortgage) and the judgment is still there.
- Can my friend petition the court to "cancel" the judgment since they have attempted to pay it without success?
- If the judgment is not going to be paid or "canceled," can my friend get the $8,000 back?
- Is my friend owed a refund of interest paid on the $8,000 and possibly a fair interest rate for the use of the money during the time (approx 2 yrs) that the Mortgage company has been holding the funds?
- What is the process to locate whoever bought that debt/judgment or if it is in fact owned by anyone now given that my friend does not have any idea who the original creditor is/was?