If you ever have the misfortune to be sued for non-payment of an invoice/debt, it is really important to know what steps to take to allow you to remove reference to the court proceedings from your credit record when the matter is resolved.
Ledge Solicitor’s Price Sierakowski have recently spoken to us about the difference between having an action dismissed or discontinued. There is a world of difference between the two as you will see below:
- Credit reporting agencies will generally erase all mention of an action if the action has been dismissed. This is not an automatic process and it requires the client to send proof of dismissal and a request that credit records be updated to all major credit reporting agencies.
- For matters that have been discontinued, some credit reporting agencies are now keeping record of those claims on the credit report for 5 years, regardless of the fact that the claim has been paid in full. The best some credit reporting agencies will do if you prove that payment has been made in full will be to mark the claim as ‘paid’. In many cases this doesn’t provide any relief to the client, as the mere fact that they had proceedings brought against them is enough to scare off lenders.
- Once an action has been discontinued, the court file is closed, and cannot be re-opened to change a discontinuance to a dismissal.
To avoid a discontinued action remaining on their credit record, when striking a deal to settle any court proceedings clients should be insisting that the matter be dismissed as part of the settlement proposal. This is usually done by client receiving, in exchange for whatever they are to pay, consent orders signed by the Claimant with orders to the effect of:
- The action be dismissed; and
- There be no order as to costs.
The client can then execute the consent orders, file them with the court and receive a stamped or sealed copy of those orders, and proceed to contact the credit reporting agencies to get the action removed from their record.
It’s all pretty simple once you know what you are doing, but can be very harsh for clients who get a claim discontinued who think that because they have paid in full the matter will be removed from their credit record. In many cases, clients actually dispute the debt owed, but pay all or some of it just to make it go away – which is particularly rough when they find out that it hasn’t actually been removed, and in fact remains on their credit report for 5 years.
If this article has sparked any questions and you would like to know more, contact your Ledge Finance Executive directly or contact us here.