One of the most common questions we are asked is “Can Clean Credit remove court judgements from my credit file?” The answer to this question can undoubtedly make all the difference to your business. BUT, before we answer this crucial question, let’s take a quick look at what a court judgements actually are.
What are Court Judgements?
A court judgement is a legal order that makes a person or organization liable for an amount of money. If someone feels they are owed money by another party, they have the option to commence legal proceedings in an attempt to recover the amount outstanding.
This process typically involves the services of a solicitor. The solicitor will begin by preparing a Statement of Claim. In these proceedings, the party that is commencing the legal action is known as the plaintiff or claimant. The party being sued is known as the defendant.
Statement of Claim
A Statement of Claim will outline the case and what the defendant may do to resolve the matter. Typically, a Statement of Claim will give a 28 day period for the defendant to either file a defence or settle the matter with the Plaintiff. This process does vary slightly from State to State.
One thing that does differ is the process of the defendant being served a Statement of Claim. In the State of NSW, the defendant is personally served. In other States, the plaintiff can choose to mail the document.
Clean Credit often deal with people in NSW that were not served and yet a judgment was entered. In some cases without them even knowing. Whilst it is possible this could indicate a flaw in the process followed by the plaintiff or their solicitor, this can also be caused by what is known as substituted service.
If a party such as a process server makes repeated attempts to serve the defendant, they may make an application to the court to be awarded substituted service. Once substituted service is awarded, the plaintiff is seen as having fulfilled their obligations of serving the defendant. Furthermore, the notice period of the Statement of Claim would begin at this time.
A court action is recorded on a credit file for five years. However, the limitations period under the act is twelve years. It’s also worth mentioning that the credit reporting agencies gain this information from the public records that the courts produce and not from the plaintiff or solicitor.
Can Court Judgements be Removed from a Credit File?
The short answer is YES.
In most cases, court judgements can be removed from a credit file.
Notice of Discontinuance or consent order
The process of removing a court judgement from a credit file begins with having the plaintiff agreeing to sign a Notice of Discontinuance or Consent Order. However, this depends on the State the judgement was entered in. By signing this document the plaintiff is agreeing to formally discontinue their action. Not an unreasonable request if the judgement is paid or the defendant can settle the debt. However, this can be a very different matter if this is not the case.
If the judgement is unpaid there’s very little chance the plaintiff will agree to discontinue their action. From experience, it can be beneficial if the defendant has not paid the judgement but is in a position to settle with the plaintiff at the time we approach them. Plaintiffs are motivated by the prospect of getting paid.
In most cases even if the judgement has been paid prior, the plaintiff will agree to sign the necessary documents, given they are approached in the right way of course.
One exception is if there is “bad blood” between the two parties. An example of this would be a situation where prior to the judgement being entered, both parties were at high disagreement and interaction may have become personal. In these cases, the plaintiff may not want to do anything that could be seen as assisting the defendant. Even in these extreme examples, this situation can often be overcome with effective negotiation.
Returning the documentation
Once these documents have been executed by the plaintiff, the documents need to be returned. They must be returned to the court where the judgement was entered to be filed and stamped. Depending on the State, the necessary supporting documents can range from the Notice of Discontinuance, Consent Order or other documents including a comprehensive Affidavit from the defendant.
Credit reporting agencies
Once the court has filed and stamped the necessary documents it is a matter of providing the stamped order to the credit reporting agencies. In most cases, with this information in hand, they will delete the listing from the defendant’s credit file. As you can imagine, there are a number of steps to this process and it does take time. From dealing with the plaintiff to having the documents filed and stamped to the actual deletion of the listing, we quote up to eight weeks to achieve this goal- longer if the plaintiff does not initially cooperate.
The great news is that if you have a client that cannot secure finance because of a court action listed on their credit file, all is not lost! With the right skills and knowledge, these listings can be permanently removed from a credit file.
Interested in finding out more? Discover how important your credit rating is.
Updated February 2020