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I Was in a Debt Settlement Program and Was Sued by a Creditor and Never Knew It. – Elizabeth

Written by Steve Rhode

“Dear Steve,

I thought I was so close to closing the chapter in my life from the past full of debt.

Then I recently learned of something else that came to light as a total shock! I have lived in Michigan for the past 2 years after living in Washington DC for 2.5 years before that. Prior to DC, I lived in California.

I recently was encouraged by my bank to take a look at my credit report for some “irregularities”. I pulled a free credit report and learned that I had a civil judgement entered against me in California in February, 2011. I had a lawyer friend in CA look into this and apparently service was delivered some time in 2010 to a Postal Annex where I had received mail for about 9 months back in 2009 just after leaving the state.

This was for a credit card that I had registered with a debt settlement company, for which I had paid monthly for two years during this time for the settlement company to negotiate on my behalf.

This was never negotiated and the settlement company says they can’t do anything about it. So, now, I have a judgement looming out there, with me first knowing about it until now, when it is after the 2 year SOL has passed to file a Motion to Vacate for improper service (I truly didn’t know about this judgement until about a week ago in 2013).

What should I do? Can I wait until an attempt is made to move the judgement to Michigan and file to vacate then? Or do I try anyway in California? Or do I figure out who owns the debt at this point and try to negotiate some sort of settlement? I am at a loss and just trying so hard to get the debt issues behind me so I can move forward to start building a good credit profile over the next several years.

Thanks for your help!



Dear Elizabeth,

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I’m sorry to hear this happened to you.

It’s one of the reasons I commonly suggest bankruptcy. In a chapter 7 bankruptcy the debt is typically discharged in 90 days and the credit can be rebuilt relatively quickly.

In your case there is little motivation for the debt owner to “settle” since they now have the judgment on record. That being said, a lump sum settlement offer may persuade them to take something now rather than wait for it all over time.

If you do settle, make sure you get something in writing that states the settlement will be accepted for the full value of the debt and once paid the judgment will be considered satisfied.

I would anticipate the judgment amount will be significantly higher than the balance you originally enrolled with the debt settlement company. The debt owner will have added interest, fees, penalties, and attorney fees.

I’m much more of a let’s deal with it guy. I’m not typically a big fan of the wait and see if they find me approach. In your case that judgment will be an issue if you go to buy a house or apply for credit. I’m sure it’s bringing down your credit score.

If you wanted to take charge here I’d suggest you see who your consolidated credit report says the owner of the debt is and contact them to work out a repayment arrangement.

Otherwise, talk to a local attorney about what your legal options may be.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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