How to Settle a Judgment for Less

Credit judgments occur after you default on a debt and a creditor sues you in court. A judge in court may rule in favor of a creditor if you fail to appear in court, or if evidence shows that you owe the debt in question. A judgment remains on your credit for up to seven years; if you fail to pay a judgment, your creditor can take action to begin garnishing your wages, or place a lien on your bank account. Fortunately, you can possibly settle a judgment for less than you owe.

Instructions

1

Review your personal finances. Look at your budget and money to determine how much you can afford to send your creditor to satisfy the debt.

2

Speak with your creditor directly, or contact his attorney. Discuss plans to satisfy the debt, but mention that you can only afford to spend a certain amount on the debt. Offer a settlement for less than you owe the creditor. Be specific and let the creditor or attorney know how much you can afford to pay.

3

Negotiate with your creditors or the attorney. Be ready for the creditor or attorney to reject your offer or counter your offer. For example, if you owe $6,000, but offered to settle the judgment for $3,000, the creditor or attorney may counter your offer and agree to settle the debt if you pay $4,000.

4

Ask the creditor or attorney to put the terms of the new agreement in writing. If permitted to settle the judgment for less than you owe, do not send a payment until you receive the new terms in writing from your creditor or attorney. Keep a copy of the letter as proof that the creditor agreed to settle the judgment for less.