I have a scenario here in California that I really need some help with.

I had a judgment from 2001, which I just paid in full and went to the court to file the satisfaction of judgment. While I was there I find that I have ANOTHER judgment that I was completely unaware of!! I'm in the process of cleaning up my credit, and right smack dab in the middle of buying a house. My mortgage approval was conditional that I pay off the first judgment as it showed up on my credit report. Needless to say, I was dumbfounded when I found out yesterday that I had a judgment from 2005 which I never knew about. I had moved a little over a year before they supposedly served me with the court papers, and on the paperwork it says that they served me by substitute method of mailing to my old address?? I hadn't lived there in over a year and I had put in a change of address, but I think that they expire after a year.. Either way, I don't know who this person is that's suing me - It's an attorney listed for Melville Acquistition Co... Never have heard of them, so I'm assuming that they must have bought a debt of mine from years ago.

My questions are as follows:

1) Do I have any recourse other than to pay them now? The judgment was filed 05/2005 and because it was never reported to the credit reporting agencies, I never knew about it.

2) If I have to pay it, what are the chances that they will accept a lesser amount?

3) Should I contact my mortgage lender and let them know what I found and notify them that I'm in the process of trying to resolve this? I'm SO afraid that this is going to hurt my chances of buying a house. I've worked for several years trying to clean up my credit after some poor choices and a divorce that nearly sent me bankrupt. My escrow is supposed to close July 31st and I want to make sure that nothing stands in the way!!

Just when you think that you've finally gotten things straightened out, something comes crawling out of the woodwork. It really is depressing.

Any advice would certainly be appreciated.

1. If there was not proper legal service, you can challenge that in court,
You can offer them less but it will just depend, esp to how much they paid for the debt. Them not reporting it to credit bureu does not effect you oweing debt

Why tell the mortgage company, if they are not asking about it.
But why such a long time to closing ? July 31.

1) We can't answer that until we know if the debt is valid. You have to get a copy of the court papers to see if the debt is yours. If you still are unsure, then file a motion to vacate the judgement on grounds of improper service. Assuming that's granted and they refile, you can ask for verification of the debt.

2) If you can get the judgement vacated, or even if you can't, there is a good chance they will accept a lump sum for less than the balance.

3) I wouldn't tell them. If they find out and ask, tell them you are trying to verify the debt and don't even know if its yours.

And I also have to wonder about a closing 4 months away.

1. If there was not proper legal service, you can challenge that in court,
You can offer them less but it will just depend, esp to how much they paid for the debt. Them not reporting it to credit bureu does not effect you oweing debt

Why tell the mortage company, if they are not asking about it.
But why such a long time to closing ? July 31.
Long closing period because the house is being built.

Very good advice from ScottGem. I would certainly try to get the judgement vacated. You said you are in the process of cleaning up your credit. If you have someone doing it for you, they should be able to challenge it / help you challenge it.

However #3, I have to strongly disagree (maybe). Here's why. In some areas, they will do a title search on the home and on the seller looking for liens and judgements, etc. In some areas, they will also do the search on the buyer, as that judgement can "attach" itself to your property. The lenders really want none of that. Where I am at, it depends on what title insurance company is used on whether they search the borrower.

If you think you have problems now, what will happen if this pops up a week before closing? You really need to talk with a mortgage lender about this. Again, just be careful, because if it is your lender and he / she knew about the judgement and didn't disclose it, it might be considered fraud.

Tread very carefully!