America’s three major credit reporting agencies did not have a good year in 2017. They faced a slew of civil litigation, including a lawsuit from dozens of state attorneys general that resulted in a settlement through which the agencies agreed to stop listing judgments on credit reports. The settlement has been largely considered a win for consumers. But credit agencies not reporting judgments is only half the story.

Don’t be fooled into thinking that the current policy is set in stone. Do not assume that credit agencies will perpetually keep judgments off their reports. They may not. The settlement they agreed to in 2017 had a limited shelf life. Parts of it expired a couple of years ago. So now, if they want to, credit agencies can begin recording judgments again.

What Is Not Reported

It used to be that credit agencies reported both past and outstanding judgments. Let us say a defendant lost a civil lawsuit but paid a monetary judgment within the first year of the decision. The judgment remains on the court’s record for 7-10 years depending on state law. Credit agencies would continue reporting that judgment for that same amount of time. They no longer do.

It also used to be that credit agencies reported both paid and unpaid judgments. That is no longer the case. Even if you fail to pay a judgment entered against you in civil court, it is unlikely the credit agencies will report it.

What Is Reported

It should be noted that a fair percentage of all monetary judgments are related to debt collection cases. Examples include:

• Attempts to collect back rent.
• Defaults on car loans and credit cards.
• Unpaid utility bills.

The important thing to know about such money judgments is that they are the result of a debt that existed before litigation ever started. Those original debts are still fair game for credit reporting agencies. Therefore, an outstanding debt that provided the impetus for a civil lawsuit will remain on the debtor’s credit report until paid.

This means that debtors can no longer blow off their bills under the assumption that doing so will not affect their credit scores. Nothing in this regard is changed. Not paying one’s bills will still have a negative credit impact.

Collection Can Continue for Years

Debtors should also not assume that judgments not appearing on a credit report is sufficient motivation to not pay. Each of the states has attached a statute of limitations to civil judgments. The average is 7-10 years. During that entire time, a judgment creditor can take advantage of every legal tool available for collection.

In addition, states generally allow judgment renewal. Let’s say you live in a state with a 10-year statute of limitations on judgments. If you fail to pay, the judgment creditor could renew for another 10 years. You could be subject to two decades of collection efforts by an agency like Salt Lake City’s Judgment Collectors.

Maybe you are in your mid 20s and assuming that this will all blow over. It might not. Buy a house in your mid 30s and it’s very possible that your judgment creditor could place a lien on it. Purchase a boat and you are risking the creditor seizing it for payment. And of course, your wages can probably be garnished too.

It is true that credit agencies no longer report judgments. For good or bad, that’s the way things are. But it’s only half the story. They could choose to start reporting them at any time. And even if they do not, debtors are subject to decades of collection efforts.