Fair Credit Reporting Act And Judgments

Many judgment recovery specialists have become very particular when it comes to which judgments they will take. Many have 2 screening levels, level one is done prior to sending documents to the Original Judgment Creditor (OJC), and level two is done when the enforcer gets their documents back from an OJC; before they file the judgment assignment with their court. Filing an assignment with the court formalizes the ownership change of that judgment. After the assignment is filed at their court, a recovery specialist can use the court for judgment recovery attempts.

My articles are my opinions and are not, legal advice. I'm a judgment broker, and not an attorney. When you ever need legal advice or a strategy to use, please contact a lawyer.

The beginning level of screening is for estimating approximately how many potential available assets the debtor has with what their OJC told the enforcer, and from what they can find with public data record searches. Level one screening is performed before the enforcer mails paperwork (the purchase contract and an judgment assignment form) to the creditor. If records from public data show negative information for that judgment debtor, the enforcer won't even even send any paperwork to the creditor, and there will be no level 2 screening.

Who gets the permission to pull a credit report on the judgment debtor? In my opinion, the creditor or the assignee of record on a judgment does, because they have permissible purpose (sometimes called probable cause). Although in the minority, some web sites, books, attorneys, and non-attorneys have said that one can't pull credit reports until one owns the judgment; and the sole valid proof of that ownership is a stamp of the court, endorsing that ownership change.

Somewhat recently we had that Pinto credit decision, that cast a shadow about the lawfulness of pulling debtor-related credit reports. This decision got overturned, and again, some judgment enforcers who own judgments, pull credit reports on the judgment debtor before filing their assignment with a court.

When a creditor has their signature notarized on an judgment assignment, and sends it back along with the properly signed buying agreement to the judgment recovery specialist; that enforcer next performs a second screening level, that sometimes includes pulling a credit report on the judgment debtor. If the next screening level reveals a lot of negative info, the enforcer mails that documents back to the OJC, and explains that they cannot help, as that debtor is too poor.

The Fair Credit Reporting Act (FCRA) states that people with permissible purpose may pull a credit report. The PDF is at: http://www.ftc.gov/os/statutes/031224fcra.pdf. If you read that PDF, notice that this statute doesn't talk about "assignment of judgment". To obtain credit reports, one must have a "permissible purpose" as defined in part 604. There seems to be two subsections which may apply to debt collectors.

The way read it, the FCRA says that one can legally obtain credit reports if they "intend to use that info in connection with a credit transaction involving the consumer on whom the info is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer".

The important phrases are "in connection with" (that is very general) and also "review or collection of an account". If a creditor sends a judgment to a judgment enforcer, there is a pending contract to collect the account (judgment debt). The enforcer reviews the account before making a decision.

One can pull a credit report when they "intend to use the info, as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation".

When an enforcer is contemplating buying a judgment, on a future payment basis or for cash upfront, the enforcer are a "potential investor". Servicing that account is another way of saying collecting the debt. This got published 13 years ago, in the Gramm-Leach-Bliley Act.

An judgment assignment is completed when the stamp of the notary presses the page. That notarized judgment assignment may be compared to a deed. When a grant deed becomes acknowledged, the title to that property becomes transferred (whether recorded or not). When you have the assignment of judgment in your hand, you are the judgment owner, if it's filed at the court or not. This is just like if you purchase a car and later bring it to the DMV to record the title.

As soon as the enforcer gets the signed and notarized acknowledgment of assignment back, they may pull a credit report for the judgment debtor. Make sure to keep copies of all the notarized assignments of judgments, even with those judgments you reject, in case you must some day prove your probable cause for getting each credit report. Also, do not wait very long to decide if you want to keep the judgment, because certain OJCs continue shopping after they send your documents. When you decide you are going to attempt to recover that judgment, file the assignment with your court to seal the deal.

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