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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34354
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I have a civil judgement on my credit report from 2006 and

Resolved Question:

I have a civil judgement on my credit report from 2006 and am attempting to find out how to settle this since it is preventing my husband and me from purchasing a house. From research I have done I have found one can settle a debt like this for less than half of what is owed. How do I go about doing this? Do I need an attorney and, if so, what is the typical cost of this kind of service? The judgement debt is stated as $8000, but the original debt was less than half that. I will never have $8000, but can come up with $3500. Thank you for your valuable time.
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 3 years ago.

The first thing you need to know is whether or not the creditor has sold the judgment to a debt collector. Most debt collectors pay 5-10% of the judgment value, and sometimes less. So, your ability to negotiate increases substantially once the debt is sold.

If your credit report shows a debt collection account, then that would immediately tell you that the note is sold. Otherwise, you can contact the original judgment creditor and simply ask if they will consider a settlement, and if they say yes, then that means they still own the note. You can also check the court file where the judgment was entered, because in order to assign the judgment, the assignment must be filed with the court. This is the most reliable method.

Once you know who owns the judgment debt, you can send a letter and make an offer. Pick a number above the 10% that the debt collector would pay, because that's more than either is likely to get. Then mention something about the fact that if you cannot negotiate a settlement that you will be forced to file Chapter 7 bankruptcy.

Even if this is not true, the creditor will know that unless it negotiates, there is a chance that it will be discharged entirely from the judgment and get nothing at all, if you file bankruptcy. The creditor also knows that a typical Chapter 7bankruptcy runs about $2,500 if you hire an attorney, so you could mention that you know how to do the paperwork, so that it will cost you no more than a few hundred dollars in filing fees.

The point is that you want to provide a picture that the creditor doesn't have a snowball's chance of ever collecting more than you're offering.

Then see if you get a response. If you do, come on back and we can talk about the process of making sure that you don't pay the judgment and then have the creditor refuse to remove the credit ding, because that is a completely separate and somewhat more complex issue.

Hope this helps.

Customer: replied 3 years ago.
The debt WAS sold to a collection agency by the name of Worldwide Asset Purchasing. So, do I offer 15-20% of the original debt or the judgement debt? Thank you!
Expert:  socrateaser replied 3 years ago.
Start as low to 10% as you can, because the debt collector may immediately reject the offer and come back with something around 75%. Then, you can start talking bankruptcy, etc. This is a negotiation, and with debt collectors, you are generally dealing with a combination of scum and morons. However, they are all paid on commission, so everything is negotiable.

What you ultimately want is a "satisfaction of judgment," that you can file with the court. The trick is to get the document simultaneous with your making payment. Because once you pay, the debt collector will stop communicating with you, and you will end up having to ask the court to declare the debt satisfied, which is a pain and you may have to hire a lawyer to handle it for you. So, you either need to hire an escrow company in where the debt collector is located, or arrange to meet a representative of the debt collector who will hand you a satisfaction instrument when you hand him/her the check.

Hope this helps.

socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34354
Experience: Attorney and Real Estate Broker -- Retired (mostly)
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