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I'm almost afraid to ask this question....here it goes.... I had a default judgment on a $5000 debt I owed. My wages are currently being garnished. Neither is being reported on my credit report (Thank God). I'm in the process of cleaning up my credit report and paying down my old debts. I know that underwriters will see this when they ask for recent paystubs. How will underwriters look at garnishment on my paystub? (I'll have a zero balance in two month) Will this hurt me?
Have you already applied for mortgage loan? If not then just wait until it is paid off, no aggravation that way.
If you applied did you mention the garnishment? If you did not mention the garnishment I believe (not 100% sure) they can automatically deny you for non disclosure of debt and falsifying an application.
Hopefully one of the mortgage guru's will chime in with more accurate information.
If you apply now, you'll have to explain the judgment & garnishment. The payment will be included in your debt ratio. The judgment may make an underwriter leery of approving depending on how long ago it is from, if it's over 12 months ago you would probably be fine though. Within 12 months and underwriter would probably make you wait 12 months.
If you apply after the judgment has been paid, then you do no need to answer "yes" to the question on the loan application asking if you have any outstanding judgments, and then the judgment wouldn't come up.
if this debt was a loan of some sort, then there would be no way around it, as there is also another question that asks if you've ever been obligated on a loan that resulted in a judgment. If the judgment was paid off/garnishment complete then it wouldn't be included in your debt ratio anymore though.
@lassjrmatt wrote:I'm almost afraid to ask this question....here it goes.... I had a default judgment on a $5000 debt I owed. My wages are currently being garnished. Neither is being reported on my credit report (Thank God). I'm in the process of cleaning up my credit report and paying down my old debts. I know that underwriters will see this when they ask for recent paystubs. How will underwriters look at garnishment on my paystub? (I'll have a zero balance in two month) Will this hurt me?
Even if the judgment is not on your credit report, it is a public record. It will come up when the title company does the title search. They check public records to make sure you don't have any outstanding judgments. I would just wait the two months until it's paid before applying if I were you.