How To Remove a Vacated Judgment from Your Credit Report

Court judgments typically stay on your credit report for seven years from the date of filing. But what if a judgment was vacated by the court?

In an ideal situation, this vacated judgment would be automatically removed from your credit report as the credit agency collects data from the court system. Realistically, however, it may take some time for your credit report to be updated to reflect the vacated judgment, and it is wise to be proactive, particularly if you will be applying for a loan in the near future.

The first step is to obtain a copy of your credit report from each of the three credit reporting agencies (Equifax, TransUnion, and Experian). Reports are available for a nominal fee. Federal law also allows you to obtain one free credit report from each of the three agencies every twelve months.

Once you obtain a report, review it carefully for accuracy. Assuming the vacated judgment still appears on your report, you will have to initiate a dispute with each agency.

Each agency’s process may be slightly different, but you will need to provide each agency with a letter disputing the judgment along with the court order vacating the judgment. Depending on the agency, you may be able to submit the court order online. The dispute generally must be resolved within thirty days.

Legislature Examines Debt Settlement Regulations

Ohioans seeking to settle their credit card debt could be affected by a pending bill in the Ohio Legislature. House Bill 173, currently pending before the House Financial Institutions, Housing and Urban Development Committee would change existing regulations governing debt settlement companies.

Debt settlement companies are third parties who intervene between a debtor and creditor, offering to settle creditor debts for a small percentage of the amount owed. In a typical case, the debtor stops paying the creditor and instead makes regular payments to the debt settlement company, who then attempts to negotiate a settlement on behalf of the debtor.

Currently, these companies are regulated under a 2004 statute known as the Debt Adjuster’s Act (Ohio Revised Code § 4710.01 et. seq.), which, among other provisions, limits fees charged by debt settlement companies to the greater of 8.5% of the debtor’s monthly payments or $30. Additionally, the Federal Trade Commission finalized rules in 2010 prohibiting companies from charging fees before debts are settled.

House Bill 173 would create separate regulations for debt settlement companies. Under the bill, these companies would be exempted from the requirements and fee caps of ORC 4710.02 and – as in the 2010 FTC rules – prohibited from charging up-front fees to debtors. Fees would no longer be capped, but companies would be subject to additional regulations, including registering with the Department of Commerce and disclosing a variety of information to debtors.

The Columbus Dispatch recently published an article summarizing opposing views on the bill, and the Ohio Legislative Service Commission has a full analysis of the legislation.