A judgment is a decision reached in civil court by a judge. The judge rules that you failed to pay as agreed on a credit account, and that you legally owe a creditor or debt collector. It is a very serious ruling that could subject you to garnishment of your bank account or wages. The New York Times reported in April 2010 that pay garnishments were rising fast, with creditors quick to take advantage of judgments. You can avoid garnishment by making a counteroffer to settle the judgment -- possibly for less than the amount awarded by the judge. The challenge is getting the creditor or debt collector to accept.
Schedule a free consultation with an attorney -- especially if you have little experience in civil court judgments. You can still choose to handle the settlement yourself, but the attorney can advise you about legal maneuvers that may be helpful. For example, in California and other states, you can appeal the judge's ruling by entering a Notice of Appeal. The appeal allows you to challenge the judgment on legal grounds, such as a procedural error allegedly made by the judge. Or you can file a file a Notice of Motion to Vacate Judgment, which is typically filed after people fail to show up in court to defend themselves because of illness or another good reason. Either notice will put the case -- and possible garnishment -- on hold until another court hearing. That gives you more time to negotiate a settlement. Get a referral for an attorney by contacting your local Legal Aid office.
Review court papers notifying you of the judgment, and note the contact information for the creditor or debt collector.
Call the creditor or debt collector to negotiate a settlement. Generally, the threat of garnishment gives the creditor or debt collector considerable leverage, making it difficult to settle for less than the full amount owed. However, by adopting a firm but reasonable negotiating position you may convince the debt collector that you are no pushover -- especially if you or your attorney filed an appeal or a request to vacate the judgment.
Offer to settle for, say, 75 percent of the amount due in a lump sum, or 100 percent of the balance in installments. Keep negotiating until you have a deal. The creditor or debt collector may accept a counteroffer to avoid the time and expense of another appearance in court to seek a garnishment or to fight your appeal or notice to vacate the judgment.
Obtain the terms in writing before making a payment. Insist that the debt collector stipulate in the agreement that all collection efforts will cease as long as you pay as greed. Pay by cashier's check to protect your personal banking information.