The three major credit reporting agencies are changing the recording of judgment information. The changes will directly affect collection of New York judgments (and collection of your receivables).
In part, effective July 2017, civil judgments must now include the judgment debtor’s date of birth or social security number in addition to the name and address and other pertinent information.
Without the requested information and the updated reporting requirements (must be updated every 90 days), the agencies will not record the civil judgments.
Although the changes made by the credit reported appear small, they will directly affect collection of your New York judgment.
The additional reporting requirements will be too onerous for some judgment creditors and their agents. As a result, many judgments will not appear on your judgment debtor’s credit report.
The omission of the judgment information on the credit report indicating that monies are owed to you is troublesome in at least three ways.
Fewer judgments will be satisfied
Without the reported judgment information, a prospective lender or creditor will not be put on notice of the debt owed to you. In the past, many times, seeing the information, would cause a credit grantor to stop and request that the judgment be resolved, before extending credit to the individual borrower.
The judgment debtor will not be required to resolve many of the judgments before gaining new or additional credit.
Credit will be extended to non-creditworthy borrowers
Selling on terms, makes you a lender. Often credit to a business is based upon an Officer’s guaranty and credit. How can you be sure that the guarantor is credit worthy without a real picture of the guarantor’s credit?
You will see an increase in bad debt
Buckle down. The changes to the reporting requirements are sure to increase aged receivables. Make sure you alter your credit policies (click through to our page on credit policies) to account for the anticipated changes and increased risk.
Jocelyn Nager blogs weekly about credit and collections. Please visit our blog for more information and Subscribe to our blog. Frank, Frank, Goldstein & Nager is a law firm devoted to the prevention and collection of bad debt. Have questions about receivables owed to you? Contact FFGN for a free consultation.