Q: I have had a judgment of $8,600 on my credit report for the past six years. Although the judge ruled in favor of the plaintiff, I never owed that money and I believe I lost only because I didn’t have an attorney. Now, I wish to become a first-time homebuyer.

My credit union tells me I could qualify based on my credit score and income, but I would have to pay off the judgment or arrange to make payments with the creditor before the credit union would preapprove me for a loan. I contacted the creditor’s attorney, who was sarcastic and said he couldn’t force his client to respond to my payment proposal. I asked him to counteroffer if necessary, but I haven’t heard from them in two weeks. I really want to buy a home but this presents an obstacle. What should I do now?

Q: I have had a judgment of $8,600 on my credit report for the past six years. Although the judge ruled in favor of the plaintiff, I never owed that money and I believe I lost only because I didn’t have an attorney. Now, I wish to become a first-time homebuyer.

My credit union tells me I could qualify based on my credit score and income, but I would have to pay off the judgment or arrange to make payments with the creditor before the credit union would preapprove me for a loan. I contacted the creditor’s attorney, who was sarcastic and said he couldn’t force his client to respond to my payment proposal. I asked him to counteroffer if necessary, but I haven’t heard from them in two weeks. I really want to buy a home but this presents an obstacle. What should I do now?

A: I’ll give you a short answer and a long answer. If you really want to buy a home now, and are otherwise ready to do so, pay the $8,600. Get that mark off your credit report, get closure and get on with your life. Since you asked the question, though, I’ll assume you can’t lay hands on a spare $8,600 to vanquish the matter entirely.

Mindset Management

You must get closure, mentally, on the issue of whether you owed the money in the first place, why you lost the case, and any other such issues. It’s no longer relevant, and hasn’t been for six years. Your job now is to stay very results-oriented and fixated on your goal of getting this thing resolved, not only so that you can buy a home but so that you can move to the next phase of your life. Let that attorney’s sarcasm and the refusals to counteroffer, etc., roll off your back like water off a duck’s — do not be moved from your mission to get this resolved. No matter how frustrated you get, stay in contact with the attorney and keep on issuing proposals until you’ve reached a settlement or payment arrangement with them.

Need-to-Knows

Money talks. When negotiating to settle these sorts of judgments, you’re better off if you can offer some large lump sum less than the full amount to totally settle the deal, rather than making small monthly payments over a long period of time. While it’s easy for your creditors to turn their nose up at $100 per month over 86 months, most people and companies in America now could use a good chunk of cash, so it’s a lot harder for them to ignore or reject a lump-sum settlement offer for half or even a quarter of the judgment.

Also, derogatory entries on your credit report expire off the report after seven years, and you’ve said that you’ve been dealing with this judgment on yours for six already. Through some strategic timing, you might be able to have your mortgage lender run your credit report after the entry has expired off your report and qualify for your mortgage even before the judgment issue has been resolved. It’s possible, although a good mortgage broker would likely be more effective at coaching you through that process than the loan rep at your credit union. …CONTINUED

However, if the creditor sends the judgment to a collection agency, or if one collection agency sells the account to another agency, or even if you reach a settlement and the creditor reports the payment arrangement to the credit bureaus, any and all of these items could cause the seven-year clock to begin ticking again.

Also, the standard loan application asks whether you have any outstanding judgments against you, and many lenders will require you to resolve it — even if the judgment does not appear on your credit report — so that the creditors cannot file a lien again the property. As such, my best advice to you is to strike a settlement with the creditors or pay the thing off to get the matter resolved entirely, if at all possible.

Action Plan

1. Ask your friends and relatives to refer you to a good, local mortgage broker, who might have strategies and solutions that your credit union will not offer you.

2. Be persistent in your efforts to settle the matter with your creditors. Do not allow their attorneys’ attitude problem to keep you from handling your business.

3. You mentioned that your initial court case with them failed because you didn’t have an attorney. While it’s probably too late to battle the initial matter, it is not too late to get an attorney’s help in dealing with this matter. Consult with a lawyer who specializes in bankruptcy and debt resolution — she might be able to get done with one phone call to the creditor’s lawyer what you couldn’t get done with weeks of effort and drama.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.

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