Should I try to settle this judgment, or keep making payments?

Asked over 1 year ago - Orlando, FL

Back in 2008 a judgment was granted against me (unbeknownst to me) while I was paying the collection agency/attorney for this 2004 repo. They started garnishing my wages in November of last year, but I went to court and was awarded exemption. I made a payment arrangement of $50-$100 per month since that's all I can afford (judgment total is $5700, I've paid $2150 to date, original amount was $3500). However, since it's tax time, I kind of want to get this out of my life and I plan to try to buy a house in about 4 more years and I know this judgment may stop that. Would it be worth it to try to offer a settlement to them (about $3500) or just keep paying the monthly amount? Would it benefit me at all going either way?

Attorney answers (3)

  1. Anne-Marie L. Bowen

    Contributor Level 11

    1

    Lawyer agrees

    Answered . You should definitely try to settle the debt. You have nothing to lose in making an offer. Find out what the balance due is after your last payment and then base your offer on that number. Wait to make an offer until you are able to pay it in a lump sum immediately. In other words, don't make an offer that you can't pay until next week or next month. Creditors are often more willing to settle between the 20th and 25th of the month so time your offer accordingly. Also, you'll need to explain to them a hardship as to why they should help you (for example maybe you've had employment troubles, lost hours at work, had to take a lower paying job, sickness, etc.) Offer to pay off say 25% of the remainder in a lump sum and see what they say. If they want 80%, offer 30%, etc. until you both agree. Never ever give them your best or highest offer up front because they always want more. Start low. Go for getting this monkey off your back so you can move forward with your life and buy that house in the future.

    One last caveat, if you do have other debt than this, then seriously consider meeting with a bankruptcy attorney first because your money may well be better spent in dealing with all your debt than with just one creditor.

    The above information does not establish an attorney-client relationship and is based upon the limited information... more
  2. John R. Cantrell Jr.

    Contributor Level 8

    1

    Lawyer agrees

    Answered . Pull a credit report and make sure that this is the only significant debt showing up on your credit. If not, then you should consider bankruptcy, since it will probably cost you less to deal with all of your debts in a bankruptcy than it would just to settle this one debt. On the other hand, if this is your only debt, bankruptcy doesn't really make sense. Normally, the collection attorney gets paid on a contingency fee based on how much the attorney collects. Therefore, if the creditor gets paid sooner, then the attorney gets paid sooner. If you have a lump sum that is perhaps somewhere between 50-75% of the balance owed, the creditor might accept it to payoff the judgment in full, especially if a bankruptcy attorney were to tell you that you could file a bankruptcy and wipe out the judgment. That might increase your negotiating leverage. Although bad credit items can stay on your credit for seven years, your credit normally improves significantly by about two years after paying off the bad debt, so if you deal with it now, your credit should look a lot better when you are ready to buy a house.

  3. Dorothy G Bunce

    Pro

    Contributor Level 20

    1

    Lawyer agrees

    Answered . It won't cost you anything to make the offer, and I might start at a lower amount than you are proposing to give yourself some wiggle room to sweeten your offer. My esteemed colleague, Charles Smith, of Ohio, has written a great article on settling debts & I am posting the link below. Hope this perspective helps!

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