How to Settle Judgments

In a difficult economy, even responsible people can find themselves buried in debt. At the same time, creditors often are desperate for cash and might be willing to settle debts, even valid judgments, that they might not have been willing to negotiate before. If you can settle a judgment, you can save money, possibly improve your credit score, and have the peace of mind that comes from being free of onerous debt.

Instructions

Make an Offer

1

Determine who your creditor is by examining the court ordered judgment. You should have been provided with this when you were subpoenaed and/or when the judgment was entered against you. The original creditor might have sold the debt to a third party, so it is important to double check to whom the judgment is owed.

2

Determine the amount that you can reasonably pay at the time you make your settlement offer and make sure that you have the money on hand to pay immediately upon acceptance of your offer. You might want to offer slightly less than what you can actually afford to pay in case your first offer is rejected.

3

Draft a letter to the creditor explaining that while you do not expect to be able to pay the full amount of the judgment anytime soon, you can pay a certain amount, in certified funds, now, if they agree to settle the debt and not hold you liable for the rest of the judgment.

4

State in your letter that you will not negotiate nor will you communicate with the creditor over the phone. To protect yourself, insist that all communication be in writing.

5

Make a copy of the letter for yourself and for your attorney, sign the letter, and send it certified mail, return receipt requested.

Follow Up

6

Give the creditor a reasonable amount of time to respond to your offer. If you don't hear from the creditor within 30 days of sending your letter, send another letter.

7

Respond to communications from the creditor promptly. If they agree, in writing, to settle the judgment, send them the money via cashier's check through some traceable means (such as certified mail, registered mail, overnight mail or priority mail with delivery confirmation). If they want more money, and you can settle for a higher amount, do so.

8

Check your credit report. Make sure that the judgment is listed as settled. If it isn't, dispute the information with the credit bureaus.