Contract Settlements

August 10, 2023


When one company (or party) owes money to another, negotiating a settlement is usually an option. This can happen either before, during, or after a lawsuit to get a judgment. Settlement negotiations can occur anytime, although sometimes after settling, debtors do not actually follow up and make the payment they agreed to.

This article is my opinion, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.

A written settlement contract should clearly define the terms and remedies available, should either party breach the contract. Here are six other things a judgment creditor (and others) might consider in settlement negotiation contracts, to discuss with their lawyer:

1) Make sure there is a firm deadline for the debtor to make their payment; and that the settlement contract becomes null and void in the event of either non-payment, or if the debtor files for bankruptcy. If your debtor files for bankruptcy protection, you might then wish that you had never settled with them. I am not a lawyer, so please discuss any bankruptcy questions or issues with a bankruptcy attorney.

2) Consider having the debtor(s) notarize their signature(s) on the settlement contract. There is rarely any legal requirement for a settlement contract to be signed in the presence of a notary public. However, doing this means that if a new lawsuit is required later, notarized documents are usually self-authenticating; which usually makes it easier to get the documents accepted as evidence. Also, using a notary reduces the chance of any forgeries.

3) Make sure that all debtors, and anyone else that should sign; does sign. Depending on the circumstances, some examples might be the debtor’s spouse, their accountant, company officers, their attorney, etc.

4) When there are settlement negotiations during an ongoing lawsuit, or with any negotiated settlement contract situation, consider arranging to “transform” the contract or lawsuit into a stipulated judgment; signed by a court judge. Stipulated lawsuits to obtain stipulated judgments, not having any adverse parties; can be extremely cheap and relatively quick, and judgments are stronger and last longer than signatures on contracts. Turning a settlement contract into a stipulated court order and judgment, can simplify multiple transaction situations; and the court retains jurisdiction over the matter, should there be a default.

5) While it is rare, sometimes settlement contracts are kept confidential. Note that judgments are usually public records, however in certain situations involving stipulated judgments; some of the details might be kept out of the court files. If there is no judgment involved, then strong confidentiality clauses can be included.

6) Many settlement contracts include clauses to release specific current or future claims. Double check that the proper claim releases are within the contract.

Contact Us

Email *
Phone *
In what state does your debtor reside in? *
Please estimate the original amount of your judgment. *
Any additional information you think might help us?
Please upload a copy of your judgment if available
Maximum file size: 80 MB