Hickory, NC asked in Collections for North Carolina

Q: The lien was released via debt cancelation, per the statute of limitations. Are they required to satisfy the judgement?

The judgment expires this October. The bank rep says they have the options of: 1)allowing the judgement to expire 2)extending the judgement for an additional 10 years and/or 3)requiring some type of payment to satisfy the judgement. She says they are not required to satisfy the judgement unless they choose to do so. Please note that the debt was canceled in February 2016. The necessary paperwork to release the lien was never filed until I requested that it be done (5 years later). Also, the judgement amount recorded with the clerk of court is almost twice as much as the debt cancelation letter indicated. I don't know if there was a clerical error made when recording the judgement; and if so, could either of those issues be of benefit to me in any way? Thank you for your assistance.

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2 Lawyer Answers
Lynn Ellen Coleman
Lynn Ellen Coleman
Answered
  • Collections Lawyer
  • KERNERSVILLE, NC
  • Licensed in North Carolina

A: If you made no payments but received a Form 1099C cancellation of debt, your Judgment was not "satisfied" or "resolved" or "paid off". They can still legally collect on it even though on their books they deemed it "uncollectible" and wrote it off of their books. You may even have had to pay income tax on the forgiven debt, but there is 4th Circuit case law which says they can still leave the judgment out there until it expires. Their "write off" was just for "accounting purposes". This means they are not required to report the judgment as satisfied. You will either have to pay them something, or just wait until the judgment expires or else it will remain enforceable. This judgment can impair your ability to sell or refinance real estate.

Lynn Ellen Coleman
Lynn Ellen Coleman
Answered
  • Collections Lawyer
  • KERNERSVILLE, NC
  • Licensed in North Carolina

A: Also, so long as they filed the lawsuit on time (less than 3 years after the date of the last payment) there is no statute of limitation defense. The judgment remains enforceable up to 10 years from the date it was taken - that date of the judgment could be 4 years from the date of the last payment or even later, so long as the lawsuit itself was filed on time. This judgment remains enforceable ven though the underlying debt itself fell off your credit report 7 years after the first default.

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