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How To Remove A Judgment
What should you do when there is a judgment against you? One obvious option is to pay the judgment owner in full (or settle with them). What if you cannot afford to pay the total amount owed on the judgment?
Every judgment is actually a judgment situation. Some of the parameters include what state the judgment is lodged in, where you live now, what assets you have, who the creditor is, and yours and the creditor's attitude and situation.
The first judgment stopper is bankruptcy. Filing for bankruptcy protection wipes out most (however not all) judgments. If you are considering filing for bankruptcy protection, consult with a bankruptcy lawyer first, to verify if going bankrupt can wipe out the judgment(s) against you. In California, a perfected judgment lien (with accrued interest and approved costs) usually survives a bankruptcy discharge unless the debtor successfully files a motion to avoid it.
Some judgment debtors only threaten to file for bankruptcy protection, to encourage their creditor to go away, or to settle for pennies on the dollar. Making a false bankruptcy threat is not reliable, because many creditors use PACER to check bankruptcy status, and will not be fooled for long by false threats to file for bankruptcy.
Assuming you cannot, or do not want to file for bankruptcy protection, one passive way to get rid of a judgment is to at least temporarily, wait. Some creditors do not try to recover their judgments, or will give up; and all judgments eventually expire, unless the judgment owners consistently renew them.
If the judgment against you was by default, and you were really not served properly, you might be able to get the judgment set aside. This does not always work, and even when it does, the original creditor can easily sue you again. If they do, you will not be able to claim you were not properly served.
Judgment enforcement and settling a judgment, is similar to a chess game. If you do not have any non-exempt income or assets, there is not much a creditor can do (that makes sense) to try to recover a judgment against you. If you have lots of income and assets, the creditor has an infinitely stronger position.
You could try to settle with the judgment owner. Most creditors will probably have to give up 50%, to get their judgment recovered, so perhaps settling for 50% is reasonable.
Some creditors put their principles above common sense, and some think their judgments are guaranteed. They will never compromise for even one penny less than the full theoretical value, including interest and costs. Often, those beliefs increase the odds the creditor will never be repaid.
Amazingly, even when a judgment is about to expire, or the judgment debtor has no ability to repay a judgment, some creditors still will not compromise, because they have too much emotional baggage.
Especially when your creditor holds a grudge, one idea might be to contact a judgment broker. They can find the right judgment enforcer/buyer to try to buy your judgment from your creditor. Your goal is to save money satisfying the judgment against you. This does not always work. When it does, it only can work when your creditor is a person or a small company.
Big companies, credit cards, collection agencies, and banks; almost never want to hear from third-parties trying to buy one of their judgments. If you want to settle, you will always have to try with them, or their collection agency or attorney.
If your creditor is a person or a small company, a judgment broker or enforcer might be able to help in certain cases. For example, when a debtor politely contacted the creditor, and the creditor's pride prevented a settlement.
A judgment buyer, and may be able to offer to buy the creditor's judgment for pennies on the dollar. This is a challenge, and sometimes the same creditor that previously said no to you, will say yes to a third-party judgment buyer.
If you make a deal with a judgment buyer, and they are able to make their purchase from the current judgment owner, it may satisfy your judgment at a discount for you. When the judgment enforcer makes a profit and you save a lot, this makes sense.
When you pay off a judgment, make sure to get a court-stamped satisfaction of your judgment. This is not instantaneous, because the satisfaction is a document that must be calculated and filled out, notarized, and stamped and filed by the court the judgment came from.
Once you have a satisfaction of judgment, you can file a certified copy of it with a county recorder, or send a copy of the satisfaction to a credit reporting agency, or to anyone else that wants proof that you paid off the judgment.
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