What to do if I pulled my credit report today and it reports a civil claim judgment for $7,700 in favor of the bank that was filed 5 years ago?

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What to do if I pulled my credit report today and it reports a civil claim judgment for $7,700 in favor of the bank that was filed 5 years ago?

I know what this loan is in regards to, but I never have received notification of any court proceedings. Where do I start? I don’t have funds to pay it in full, however a payment plan may be an option for me.

Asked on November 1, 2012 under Bankruptcy Law, California

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Since you were never served with the summons and complaint (the complaint is the lawsuit attached to the summons), you did not have an opportunity to respond by filing an answer to the complaint.  When you didn't timely file an answer to the complaint with the court and serve it by mail on the opposing party or the opposing party's attorney, the bank obtained a default judgment against you which was filed with the court.

You can file a motion to set aside the default with the court and serve a copy by mail on the opposing party or opposing party's attorney.  The argument supporting your motion to set aside the default is that you were never served with the summons and complaint and therefore did not have notice of the lawsuit and did not have the opportunity to file an answer to the complaint.

If the court grants your motion to set aside the default, the case will be back on track and litigation will continue.

If you don't succeed with your motion to set aside the default, you might want to consider filing bankruptcy.   If you are successful with the motion to set aside the default and after going through litigation, the bank prevails, you should again consider filing bankruptcy.

Chapter 7 bankruptcy is straight liquidation which eliminates certain types of debts.  Your income and other factors will determine whether or not you are eligible to file Chapter 7.

If you are not eligible to file Chapter 7, you can file Chapter 13.  Chapter 13 bankruptcy requires a plan (budget) for repayment of creditors.


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