How to Settle Credit Card Debt with a Judgment
One of my credit cards I fell behind with sued me and has a judgment.
Can you settle credit card judgements like other debts
—Stressed
Short answer
Yes, a judgment can still be settled. Settlements can be negotiated at every stage of the collection cycle, but settling before a lawsuit is filed is easier and usually saves more.
Key points on this page
- Settlement is possible at any stage, including after a judgment has been entered.
- The largest savings usually come from settling with the original bank after a few missed payments.
- A judgment is enforced through bank levies, wage garnishment and liens on real property.
- Judgment balances keep growing at the interest rate set by the court, and most states allow a judgment to be renewed, often ten years plus another ten.
- Wage garnishment removes most of a creditor’s reason to negotiate, so act before it starts.
- If you cannot fund a settlement, bankruptcy can stop a levy, a garnishment or a lien.
The short answer to your question is – YES! CRN does assist in settling debts like credit cards where there was a lawsuit and then a judgment entered against you. Settlements can be negotiated at all stages of the collection cycle.
There are challenges to settling credit card debts that have reached the lawsuit and judgment stage. Before I address the challenges, I want to point out that the best time to settle credit card debts is before a lawsuit is filed, and even before the account is placed with a debt collection attorney.
Watch my brief video about some of the differences between settling credit card debts with your bank and debt collectors compared to negotiating with collection attorneys whether they have a judgment or not.
While this may not be instructive to your judgment debt, you may have additional credit card debts that have gone unpaid and I want you to be aware of the following:
- Settling a debt with your original creditor (the bank you had the credit card with) after having missed a few payments is not only possible, but in your best interest. In fact, reaching settlement early will often achieve the best savings result when negotiating is done correctly.
- You may end up with credit cards that are charged off and placed with outside collection companies. This is the next best (sometimes the best) opportunity to settle a credit card account you could no longer afford to keep payments current.
- If your overdue credit card account lands in a collection attorney’s office, you can still settle the debt before any court action is filed, or at a minimum, negotiate favorable payment terms.
There is a science to navigating the collection stages I briefly outlined above. Timing, balances, who your credit card debts are owed to, and your ability to come up with the money needed to settle the debts – all will affect the strategic design of which account to settle with first, second, third etc…. It is important to have a plan to follow if you want to systematically and successfully settle debts and save the most money in the process. CRN is excellent in assisting people in this regard.
If you want to learn about how to settle your debts no matter what stage of collection you are in, we have a ton of resource pages to help you. I recommend starting at the beginning of my debt settlement section.
If you are floating out there with several unpaid credit card accounts with no real financial resources to handle the situation, or a plan for doing so, you owe it to yourself to learn if you would be better off filing for chapter 7 or chapter 13 bankruptcy before a lawsuit is filed, or now that a judgment exists. You can consult with a bankruptcy attorney for free. I recommend talking with more than one.
Collecting on credit card judgments can be challenging too.
The primary ingredient found in any debt settlement recipe, whether there is a judgment or not is… money. If you have enough of this ingredient you need to be aware of a few things.
A judgment is just a piece of paper. It’s the court sponsored enforcement of that piece of paper that is the problem. You could end up with liens placed against your real property, your bank account levied and wages garnished directly from your employer. There are even instances where a sheriff can show up to take a look around at your “stuff” and inventory personal items that can be taken to satisfy a judgment (this happens, but relatively rarely).
Judgment debt, whether past due credit card bills, personal loans, medical bills and other debts, are easier to negotiate and settle while maximizing your percentage of savings results if:
- A bank account to levy cannot be found because one in your name does not exist, or does exist but is maintained with little money in it;
- If a W-2 wage source cannot be located to garnish and;
- Where there is no real property lien, or where the lien is filed, but has been in place for some time and remains unpaid.
The one thing you can control is whether you have a bank account with your name attached. If you do keep a bank account open, realize most bank levies are attempted at the beginning, middle and end of the month – when you are most likely to have deposited a pay check, or other money to cover bills.
If you have sources of funds electronically deposited, you may want to elect to have paper checks issued to you until the credit card judgment debt is resolved.
The lien on property will generally not involve forcing the sale of the property in order to satisfy the judgment. You should look to resolve the judgment prior to selling the home (negotiate a settlement before listing if possible), or refinancing (settling before a lender does a hard credit pull is often best).
Wage garnishment is a major concern. Once your wages are attached the creditor has little reason to work with you at resolving the debt for less because they will continue to get paid unless:
- You prove you meet garnishment exemptions in your state
- You leave that job
- You satisfy the judgment
Warning: Your credit card judgment debt grows from interest and can often be renewed!
Interest is accumulated at the rate set by the court, or the maximum allowed by law in your state for judgment debt. While you may be able to be creative in how you avoid paying the judgment you must realize that the balance of the judgment is likely increasing.
If you are struggling with overdue bills and other expenses and are unable to come up with a plan to get rid of the judgment or lawsuit through a negotiated settlement or payment terms you can afford, the fact that the debt is increasing should concern you. Stop and consider what your options to resolve the credit card judgment will look like next year. The year after that.
Judgments do have a “best collected by” date, but can be renewed. Judgments have a shelf life with a time frame specific to your state. Most states allow for a judgment to be renewed prior to expiration. For many, this is a ten year time line and renewal allows for an additional 10 years. That’s a 20 year shelf life!
Identify all resources you can tap to fund a settlement offer or payment plan successfully. If you cannot reasonably come up with the money to settle the debt, or make payments after reaching agreeable terms, look to bankruptcy to stop a bank levy, wage garnishment or lien on property.
Those are the unfortunate realities.
I highly recommend anyone with a judgment, that needs to be resolved in order to buy or refinance your home, to watch this video interview I had with a former debt collector: https://youtube/QpdDks73QUw
It is always best to put a plan together to address delinquent debts before a judgment becomes the concern and you are forced into crisis mode. If you have other debts, you can still put a plan together that includes resolving the judgment too, but it is important to not waste any time in doing so.
Need some personalized help?
If you would like confidential help you can use any of the boxes below to connect with me. You can also post in the comments below for feedback. I answer those regularly.
Not sure where to start? Click on the big blue “Get Debt Help” button at the top of the page.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
I have been reading the posts and you are great at answering them.
I have a garnishment on my wages currently and they are to take 3 more payment from me. When the garnishment is done what should I do to secure that it doesn’t happen again.
This debt has been garnished on last year with a different attorney office and was refunded to me as account closed and I am hoping the same happens with this new attorney. But I just want to be sure I make the right move after it is done.
Who is the attorney, and what is the name of the plaintiff on the lawsuit?
Thank you Micheal for responding.
The Attorney for the 1st time they garnished my pay was Daniel Gordon, PC and they collected 1358 and returned it to me becuase the FIA Card Services had closed the account. NOW I am being garnished by Suttell and Hammer PS for the same account. I do not even remember when the last payment was on the FIA account I am sure it was close to 6 years this August.
Should I call the new attorney and tell them that the FIA account was closed and what happened? How did they get a new judgment when the other attorney had it?
I have numerous Credit cards that are all with collection companies and I am just not able to pay them. I am with Credit Karma and I watch it pretty regularly.
Michael, I am sorry I must have missed an email response.
Is there anything I should do to stop this garnishment? As I said the 1st attorney garnished my pay was Daniel Gordon, PC and they collected 1358 and returned it to me becuase the FIA Card Services had closed the account. NOW I am being garnished by Suttell and Hammer PS for the same account. I do not even remember when the last payment was on the FIA account I am sure it was close to 6 years this August.
Should I call the new attorney and tell them that the FIA account was closed and what happened? How did they get a new judgment when the other attorney had it?
I have numerous Credit cards that are all with collection companies and I am just not able to pay them. I am with Credit Karma and I watch it pretty regularly.
I just do not want to keep paying for the same debt.
You should consult with an experienced consumer law attorney, and preferably one with debt collection defense experience. You might also connect with a legal aid office nearest you for information about the current garnishment being from the prior judgment, or a new one you did not know about. My guess is this is the same judgment that the Gordon firm refunded you for, but that is just a guess. Have you looked in the court records? Did you see the the prior judgment was vacated? Do you see a second one in your name?
Also, call and talk to the court clerk about how to request a hearing to show that you are either fully, or partially exempt from garnishment. That is how to stop the money getting drained away, or at least a lower amount.
Thank you.
Do you think I should Contact the new attorney that is collecting the money from me for the same Judgment and let them know that the 1st attorney Gordon’s office refunded because account closed or just let them get the 3 more payments and then ask for a satisfactions?
What is your goal?
Michael, My goal is to obtain a satisfaction for the judgment to remove it from my credit report.
I would like to try and clean up my credit report to obtain a higher score so that I can buy a house.
My credit report (with Credit Karma) is showing i have 15 collection accounts and I am not sure where to start on cleaning it up.
Also, Can you please explain how the process works when a credit card is indicating charged off/closed on my credit report? what happens next?
I can only speculate, but I do not thing you got the first attorney refund because the account closed. Accounts are closed in the normal course when you do not pay. The debt does not go away.
When the judgment is paid, it will get updated with the court as satisfied. Keep an eye on the court record to be sure that this happens. Once the court record is updated to show you satisfied the judgment, it does not go away. The court record is always going to be there. It will be removed from your credit report, but typically not until 7 years from the date the judgment was entered against you has gone by.
You are welcome to post the names of the debt collectors you are dealing with on your credit reports, the balances owed,and when you last made a payment on them. I can offer you some feedback on how to start tackling your credit reports. Just post all that in the comments on the page I have dedicated to the topic here: https://consumerrecoverynetwork.com/question/collection-accounts-age-off-credit-reports/
I apologize, I left that out. they are suing for $2,337.62.
You may be able to settle this and get it dismissed for about half of that. Can you think of any options to pull together the money…family, friends, the bike in the garage you do not ride much anymore (hopefully its actually your sisters)?
You could file an answer and defend against the suit, and maybe even prevail. This option is far better when working with your own experienced debt defense attorney. But that has a cost, and it could be more than it would cost to settle the debt.
You could call to low income legal aid and see if you qualify for assistance.
Work with a local colleges law program if they have a professor/student clinic.
Work out a stipulation to judgment settlement where you agree to a set payment, and have to pay on time all the time, to avoid any of the extra collection methods you are worried about (though garnishment may not be a big concern).
No way is this amount worth filing bankruptcy over.
hello! i was served with a lawsuit two weeks ago for a debt with Dell. I got credit with them back in 2010 and like a dummy, asked my dad and sister if they would like to order a computer along with me. so i placed an order for three computers and we were supposed to take turns making payments and have it paid off within 12 months to avoid the interest fee (it was interest free for the first year). so my dad and i took turns paying off our computers and my sister never did make one payment, despite me constantly reminding her. the balance is all hers but i wasn’t able to make payments on her behalf and the debt eventually went into collections.
so now i am being sued. it may be too late to file an answer (it’s been 14 days since i was served), but i had been researching the whole time to figure out what to do. the courts don’t care that it’s not technically, my debt, right? (a girl can dream). i’m just so upset at my sister. she uses that laptop everyday, what does she think, that it fell out of the sky?
so anyway, i live in texas and i’m SO worried that they will garnish my wages or seize my bank account. i barely have enough money at the end of the month just for groceries or gas after paying rent, utilities and day care, etc. if they were to garnish my wages, it would literally be catastrophic to my everyday living. do i have any options? i don’t know about filing for bankruptcy because eventually i’d love to buy a house and would hate to see what my interst rate would be at that time. the debt was bought my midland funding, sold by dell/webank. thank you so much in advance.
How much are they suing for?
Hi Michael – I have watched some of your videos and read many of your comments, which have been very helpful. Thank you for all of this valuable information. As a result of that information, I’ve come up with a plan, but I’d like to get your input.
I have not worked much in the past 4 years and have accumulated $89,000 of debt on credit cards in order to pay my monthly expenses (mortgage, auto insurance, food, etc.) I did this by juggling zero percent balance transfers among 7 cards (4 credit card companies), but I have now run out of available credit and have defaulted on all of the cards. Here are the specifics:
Credit Card Company A – owe $38,000 (they have offered to settle for $17,000, but will be charging off in the next day or so)
Credit Card Company B – owe $26,000
Credit Card Company C – owe $20,000
Credit Card Company D – owe $5,000
If I had money or expectation of steady income, I would negotiate a settlement with each company, but that is not the case. I checked with a bankruptcy lawyer a few months ago, but was told that I would probably lose my home in the process because of the amount of equity I have (home is worth $90,000 and I have just $10,000 left to pay).
I live in NJ and assume my credit rating will be bad for 7.5 years. I accept that, but want to navigate through getting this debt resolved.
I expect that all of my debt will be charged off in the next month or two and then lawsuits will be brought against me. I’m thinking that under the circumstances, my best strategy is to find a lawyer who specializes in debt collection (I have compiled a list of possible attorneys from the https://naca.net link you provided) and be prepared to go to court. Is this my best course of action or is there something else I should consider?
You are way ahead of this by understanding what can happen along the way, and planning for it emotionally and mentally.
I like the look of chapter 7 bankruptcy in some scenarios, even though you may have to rent for a while. But that is me, from across the country. You have to think about schools for kids and whether you will be able to find an afford a place to keep them in ones that are in now, or attending good ones; property values climbing and at what rate; declining and at what rate; emotional attachments; location and proximity to health and personal services, etc.
If you follow the path you are on, and are sued by an original creditor, using a good collection defense attorney, and depending on your courts level of case overload, you may buy a year-ish. If sued by a debt buyer, perhaps more, and perhaps they will struggle to get a judgment at all, if you are well defended.
You can look at the bankruptcy option again once sued. But realize if all of this goes in that direction, and you were to file, say two years from now, if you had file right away, 2 years from now you could be qualifying (credit underwriting wise) for an FHA mortgage etc. So well on your way to credit recovery. See more about this topic here: https://consumerrecoverynetwork.com/credit-report-score-rating-debt-relief-programs/
Thanks very much for your reply, Michael. My prime goal is to keep my home. Assuming I’m able to do that, I’m not so concerned about credit score. Home is almost paid for and vehicle is also paid for, so I don’t anticipate any large purchases requiring credit.
From what I understand, I will almost certainly lose my home in bankruptcy, so that doesn’t appeal to me. Worst case scenario in losing a lawsuit would be losing my home, but at least I have a chance of retaining it. With my largest creditor already offering a settlement of less than 50% owed (knocking $21,000 off a $38,000 debt), perhaps others will come up with similar offers. What’s the best one can do? I think I’ve read that 50% is good, but don’t debt collection agencies buy debt for pennies on the dollar? If so, it would seem that creditors would settle for a lot less than 50%.
I know it can be hard not to focus on how much a debt buyer probably paid for an account they later try to collect from you on. But knowing what they pay really does not help you in any way, unless it is part of some legal defense, and even then, would not be something you win because of.
Creditors base their collections and settlement policies on many data points, and not just on single accounts. I wish it were different. Some of the largest banks softened up their pre charge off settlement policies during the record setting default rate periods they had a few years back, but not all, and most are now back to settlement standards they had prior, or that they newly developed. See this post for how the largest banks rate at settling with you: https://consumerrecoverynetwork.com/review-top-7-credit-card-lenders-best-offering-debt-relief/
If you would like to post who each bank is, and a balance approximation for each, I can offer my feedback on potential settlement amounts that are the norm, and another estimate for when you are able to knock it out of the park with negotiations (it happens). Just post it over in the comments on that rating page linked above, not in this string.
Hello, I lived in a large apartment complex for several years in VA without a problem. I moved out last year, gave them my keys, forwarding address and phone number. I was told to expect my deposit return within4-6 weeks. About 5 months later I had not heard anything. I called and inquired and they stated they would have to get back to me as it was through an old managing company (i guess they switched management companies). I never heard back and gave it up for lost. I knew there was some damage to blinds from a friends dog, and figured they kept my deposit for it.
A year later, I have received a summons with a court date for a balance of over 1000 and about lawyers fees. I am completely stunned, I had no idea I owed anything! Money is not the issue and I am happy to pay in full right away if I legitimately owe something. I would like to see an itemized bill of where they got over 1000 in charges from to make sure its legitimate since i know a friend had some problems with charges when management switched. I really do not want to go through lawyers or courts, there is no need in my opinion. How do I respond to the summons? Should I contact the old property and try to get to the bottom of this? Will that help? Can they dismiss the summons? Thank you very much for any advise you can offer.
Also, there is nothing on my credit report about this. I have very good credit and would like to keep it that way, especially since i did not knowingly go delinquent on a payment, this would be my first. If i pay out of court will this affect my credit?
If you pay up, or get them to agree to accept less, and pay that all at once, they would drop the suit in return, preventing any risk that a judgment would be entered in the court, and later hurt your credit report.
You can file a basic denial of all charges and claims they make about you owing anything, and follow the court protocols for serving your answer on them. Collectors often become more reasonable about negotiating when they know they are dealing with someone willing to defend the suit.
I know you do not want much to do with the court process, and if you want to avoid that, work this out so that you pay and they drop the case. Get that in a written agreement from them. But if it were me, I would answer their complaint and keep my options open too.
Hi, Thanks for the quick response.
So if I respond as a denial of charges to the summons I can still work it out on the side with the original rental company and have them dismiss it before the court date? Can I contact the original company and work with them and not the lawyer? And if I just pay the debt (provided they send me the bill and its legitimate) Do I need to pay the lawyer fees or is that only if it goes to court?
Again thank you so much for your help.
I am skeptical about being able to work with the rental company any more. But you can try that route. Answering the complaint would buy you time, and put them on notice that you are not just going to roll over. When it comes to negotiating the pay off amount and getting this stopped, focus on the balance they are suing you for, and negotiate down from there.
If it were me, I would be polite but firm in the fact that you had no idea of the debt, left the place expecting your deposit back, and will have no trouble hiring a consumer law attorney with debt collection defense experience, but realize some form of negotiated payoff would cost about as much.
And you should talk this over with an experienced consumer law attorney. I can send you contact info for any I know about if you post the name of a larger city nearby.
Thank you. I am located near Richmond VA. That is what I am thinking, a lawyer will cost as much if not more than just paying. Worst case scenario I go to court and have to pay the debt and the lawyer fees, just doesn’t sound worth it. I feel a little paralyzed on where to turn, what to do. Who should I contact first if I wish to avoid the need for lawyers fees at this point?
I sent you an email with contact details to lawyers who practice this type of law consistently. Each of them likely offers a no cost initial consult, so getting some feedback that helps you formulate a plan is certainly priced right. Talk to them about what we have discussed in these comments, see what they say. Talk to them about help with filing an answer only, see if they will offer that type of limited help. They may even offer to make the call and settle the debt for a nominal fee that you do not mind paying.
Post any update with how you progress.
Hi,
My wages are being garnished for the amount of $5,727.84. The original debt came from a Discover Credit Card I had when I was in college and the judgement was for $2644.00. Interest doubled my amount owed! They are garnishing my wages at 25% which is too steep for me at the current entry level salary I have of $35k.
I live in Ohio and need advice on how to handle this? I have about $2500, which is almost all my money saved, to make a lump sum payment. How can I get them to agree now after they successfully got a wage garnishment against me? Do I have any options here? Is there anyway to lower the accumulated interes of $2729.58 or avoid paying it if I pay the principle amount in full?
I appreciate your adice.
Unfortunately, in a scenario where you will have to pay every bit of the inflated debt while that full garnishment is going through, there is little reason for the debt collection attorney working for Discover to negotiate. That does not mean it is impossible, I have been able to convey hardship scenarios and negotiate lower settlements with a lump sum payment when garnishments are in place. You can too. But be ready to offer a higher amount, or for them to refuse any offer.
Your odds at successfully negotiating the lower payoff increase when you request a hearing with the court to establish you are partially, or fully exempt from garnishment. Once they are notified you are contesting, and if your situation appears like one where you would qualify for exemption, they become more reasonable.
You can contact the court clerk about how to request the hearing.
I have a recent judgment in CA for old credit card debt for $5,000. I contacted credit agency who offered a one-time payment settlement of $4,000. I am going to call them and offer $3500 but tell them I will not pay (either amount) until they send me the offer and applicable details in writing. I have 2 questions.
1. should I accept an emailed letter, or fax? or, should I demand a U.S. mailing? (does it matter?)
2. they said to be prepared to give my bank account and routing numbers when I call them back. I am going to offer to mail a money order instead, to avoid providing them with my bank information. but, it might help them accept the $3500 if I agree to give the bank info right after receiving their updated offer letter. what is your advice about actually making the one-time payment? I keep reading to NOT provide a creditor with bank info. but, I am afraid they won’t accept my counter-offer if I delay the payment process. I would be willing to open an account in my name only, and only deposit the exact amount of settlement. what is the smartest thing to do here? this credit company is known for shady practices.
THANK YOU!
1. Generally an email that contains an attached letter, or the fax copy, is sufficient. What is the name of the collections firm, or collection company you are dealing with?
2. Mailing a payment in, and using a check, or bank check drawn from your bank account, is still fairly normal. If that is the only way to pay that you are comfortable with, I understand. I do first recommend exactly what you suggested doing, and cover using a specific account for settlement purposes in this report: https://consumerrecoverynetwork.com/paying-your-credit-card-debt-settlements/. But for one account, and a single payment, and depending on who it is you are dealing with, that may not be as advisable.
Many collectors and creditors have earned a bed reputation for collections issues at one time or another. But in today’s hyper aware collection regulations environment, and the CFPB’s very keen interest in the collection space, there is often less risk of any shady practice occurring, and if it were to, it is more likely to be from human error, and so simple and easy to fix.
THANK YOU.
it is midland. my only last concern is a way to sent payment same day without giving them
any of my account information. not sure which is smartest:
1. give newly created account & routing # (I actually don’t even want them to know where I bank)
2. do a same day wire transfer to them (not sure if my account #/info will show on their end)
3. tell them I will only send cashier’s check by registered mail, which could take 5 days (& might not help my hopes for a lower settlement)
I do not think mailing payment will hurt your settlement percentages with Midland. I also would identify them as one of the collection agencies where you would have little trouble fixing any mistakes if they are made regarding electronic payments.
Waiting to remit payment until after you get everything in writing provides the cover you need.
T H A N K Y O U!!!!!!!!!!!!
My wages are currently being garnished, I had a judgement for $7570, I have satisfied the writ/accept amount however interest accrual daily,I have already paid $9040. I have been paying for over 2 years now and they state I still owe $2000.
Is there any chance for me to negotiate debt settled? or is there nothing I can do?
It is not common to negotiate a settlement on a judgment that you are successfully being garnished for. They will question why they should take less now, when they get all of it with judgment interest by doing nothing different.
You may be able to request a hearing to show how the garnishment is creating a hardship, and if you qualify, get the amount reduced, or even learn you are exempt from garnishment.
Do you have a copy of the judgment? Can you see what interest the court set? What state are you in?
This is what I have
PRINCIPLE/DAMAGES: $5,288.90
PREJUGMENT INTEREST: $1,171.14
ATTORNEY FEES: $650.00
COSTS: $435.00
TOTAL: $7,545.04
The original judgment filing in the court record should show the interest rate the court is allowing. Most states cap judgment interest, but some allow for contract interest rates. Knowing what state you are in, and the rate the judge set post interest at, would help discover if there was an error made, and additional options to look at.
I’m in CA
California caps judgment interest at 10%. The balance remaining is feasible with some added administrative costs for the garnishment.
I was served papers for a lawsuit from an attorney over a medical bill from 2010. I live in Texas. The debt is for $2600. Is it too late to settle before going to court?! I did receive a bill about a year ago and contacted the collection firm but they couldn’t tell me who the debt was from. I also sent a dispute to the credit bureau a year ago. How can I negotiate a settlement without having to appear in court and hire an attorney?! And do I still have to respond to the court documents if I make an arrangement with them?!
How much money can you come up with to settle this Angela? Were there insurance payouts on any portion of the medical services/treatments that later led to this collection?
In am in NY.. In 2007 a judgement was served upon me from Unifund partners LLC. I was making monthly payments, however, due to inconsistant income, I defaulted on the payment agreement. I was in and out of jobs, in addition was on temp disability. I have now been at my job for about a year and my employer just received a wage garnishment letter from the Marshall. My friend has agreed to loan me about $1700 to see if they are willing to settle. If not I will have no other choice but to file bankruptcy. My life and finances are totally under water, them garnishing my paycheck will lead to me getting evicted by not being able to pay my rent as well as not being able to provide for my daughter. (I am currently going back and forth to court trying to avoid eviction),. Will me telling them I am considering bankruptcy consider settling for $1700 opposed to the $3800 that they are asking for?
BC – Unfortunately, in my experience, no. Unifund will be set on getting paid the full amount whenever the situation dictates they should. And the ability to garnish gives them a higher level of confidence that they will collect the full amount.
Debt buyers like Unifund (or at least the debt collection attorneys that work for them), hear from people that they will be forced to file bankruptcy frequently. The mention of bankruptcy will not generally mean you can settle for less.
What will help your negotiations is if you request a hearing in court about your qualifying for full or partial garnishment exemptions based on your current income and expenses. The garnishment notice you got from your employer will often come with notice that you can contest the garnishment, and how to request the hearing. If it does not, call the court and ask the clerk about how to do that.
If you are able to prevent the garnishment (even partially), Unifund may be more reasonable with the settlement amount they will accept.
Thank you for your reply Michael. I did go ahead and write them a letter (Unifund/Ericc Striech PC) asking if I can settle for $1800 opposed to the whole $3800, and also asked them if they accept my offer and I do pay the $1800 if they would terminate the income execution as well as issue me a Sat of judgement. This is the Letter they sent me in response to my request says:
“This shall serve to confirm that my client will accept in the sum of $1800 (in addition to all sums previously received and also to be received pursuant to the income execution), in full satisfaction of the judgement entered against you on October 3, 2006, provided payment is received on or before August 29, 2014.
Upon receipt and collection of your payment we will advise the City Marshal to terminate the income execution and issue you a full Sat of judgement.”
Does this mean once I send them the $1800 I am done with this? Or does this mean they will just except my $1800 offer however they will still garnish my wages for the remaining balance? I just want to make sure I am interpreting this letter correctly before I make a payment.
Thank you again for ay help…
It sounds like they are saying they will gladly accept your money, and will continue to seek garnishment too. Call them and ask them point blank. You may even want to record the call. You also may want to run the response by an experienced consumer law attorney, or low income legal aid office too.
It does sound like you are in a tight spot financially, so getting the courts protection from garnishment may not be a stretch.
Let me know what you do, and learn about the tricky verbiage. I may have some additional action steps to suggest.
I emailed them to clarify, and they responded with:
“$1,800 in addition to whatever sums are received pursuant to the income execution up until the time we receive payment of the $1,800 (and in addition to all amounts received to date).”
I am planning to send them the $1800 tomorrow, so I am assuming that they will accept that and other payments recieved (wagw garnishment) up intil they recieve the $1800. Correct?
I dont get paid for another two weeks… They would recieve my $1800 payment far before then… Thoughts?
What you shared adds more color to the concerns, but I would still recommend running this by an experienced debt defense/consumer law attorney near you. They will be familiar with state law and the things Unifund does consistently.
My professional experience, which is not insignificant, is to be cautious with all things Unifund.
Hello.. I just wanted to touch base with you and let you know how this turned out 🙂 they accepted my offer of $1800 and and I was issued a Sat of Judgement…. I was able to negotiate with them even though they had already had began the wage garnishment process. They took $1800 opposed to the $3800 they were asking for. I am finally dont with this nightmare. I wanted to thank you again for your help and advice 🙂 Best regards… BC
By the way: the judgement was filed from a collection attorney’s office. The garnishment starts in August but I may be taken off work due to my pregnancy. The part that I was being honest with them about was that I may NOT return to work. I just don’t know where to go from here.
Khany – What state are you in? How much did you offer as settlement?
I live in North Carolina and 2 days ago, I awoke to a knock on my door. It was a Sheriff’s Deputy with a summons from Discover Bank. They are suing me for a past unpaid credit card bill of $9,800. The attorney’s office it came from was Smith Debnam based out of Raleigh , NC. I don’t deny this debt, but I just don’t have a whole lot to pay them every month. I stopped paying Discover about a year ago. I’ve never been sued and I’m scared.
My question is: is it too late to try and ask if I can make payments without going to court? Who do I contact? Discover or Smith Debnam’s law offices? What would be reasonable to offer to pay every month?
Thank you in advance.
You would contact Smith Debnam at this point. It is pretty common to set up some form of monthly payment agreement at this late stage of collection. But be prepared for the collection attorney to only agree to that conditional upon your signing of on a consent or stipulation to judgment. This means you admit the debt, and if you do not make a timely payment they can skip all the court process and start extra ordinary collection efforts that come with a judgment (that is a very basic description). You basically give up your rights to defend.
A reasonable offer is subject to each individuals situation. What can you afford to pay each month without fail?
Thank you so much. I know that I’ll be able to comfortably pay $120/month without it preventing me from paying my other bills. Do you think that sounds reasonable and have you ever heard of this law office? Also, when I call, do I ask to speak to one of their attorneys? One more thing, should I try and make payment arrangements on the amount I owe? Or see if I can get it reduced and then ask for payments on that?
You will be hard pressed to get them to agree to 120 dollars a month. They will want more than that, but if that is all you can afford, they may have to learn that later (after they were to get a judgment and try to collect from you).
You will rarely be able to negotiate a reduction of the balance and get time to pay in the scenario you have with Discover suing. The reason you agree to a payment is to prevent their ability to collect by way of bank account levy, cars that are worth more than 3500.00, home equity more than 35,000.00, household stuff that can be protected up to 14k value – all of which are collection options available after a judgment is entered in the court. With the agreement, and as long as you keep up your end, you do not have to look over your shoulder.
You do have the option of negotiating a settlement. Discover tends to like lump sum payments on those. Do you have any creative ideas for how you could pull together a lump sum to offer?
Hello,
I just received paperwork from HR that wage garnishment will be effective 8/1. Years ago my mother was battling with cancer and I had to stop working. I owed less than $2k with capital one and now I am being served a judgement through a collection agency with a balance a little over $6k. According to the paperwork, judegement was entered since 2010 but I moved from the property so I guess I never saw it coming. Anyway, I called to settle the account with them and they won’t settle. I was being honest with them and informed them that I may not be working a couple of months and that if they settle they may get more than the 2 months wage garnishment. They wouldn’t budge and state that my account will not allow any settling. So, where do I go from here? I just want to settle less than full and get this over with since I am expecting my child soon! Please help.
Sorry totally forgot about what the page is about. Seeing you responding all those questions made me asked one too even though it is a different subject. I settled a few other CCs with around 20% settlement, had no issues with them. I am not paying any other creditor, just did a few settlement. My credit is still very bad. I thought I should fight the interest before start negotiating since they doubled the amount with the interest. No court yet…
No worries, just wanted to be sure.
Arguing the interest rate is just not productive settlement dialogue. If it were me, I would say something along the lines of “I will fight you all the way on the legitimacy of this inflated balance, even if I have to hire an attorney. At the end of the day, I only have xxxx amount to offer, it is acceptable or it isn’t.”
Unless I had some credit or finance goals looming, and this collection on my credit was holding me back, I would stick to my guns on the offer, and reassert it every so often. If I had a finance goal on the horizon, I would try to come up with more money for a settlement.
I stop paying my credit card 5 years ago when I owed them about $13k. First collection agency added interest on top of this with the rate of 29.99 and now it is $23k total. Now the debt is own by another collection agency. I am trying to settle it down without the interest but they say there is nothing they can do. I want to know what I can do to reduce this interest rate. Who should I talk to ? Also what should be the interest rate on this? I am in Georgia and credit card was belong to Citi Bank
Thanks
What amount are you prepared to offer to settle the account? Who is the debt collector you are dealing with? Knowing the answer to those two questions could help me better target my feedback.
I want to settle for 25% of original amount without interest since it has been 5 years. 1st collector Asset acceptance, now Midland Funding owns it.
Are you paying other creditors on time (mortgage, car loan, credit cards)? If so,you appear more collectable, and they would likely hold out for more. If your credit reports still look like a grenade blew up on them for these past 5 years, you may be able to hold out for a better than average settlement, but the 25% of some previous balance may be a bit of a stretch.
If it were me, I would be negotiating from a round dollar amount I can put together on short notice, and not muddying the water with any dialogue about interest accumulation.
Just to be sure, since this page is about judgment debt… but, this account of yours never went to court for collection?
Due to a sudden and disabling illness I was no longer able to work and was unable to pay off 2 credit cards. As a result, two judgements were issued 7 years ago. They have a 10 year statute in my state with one renewal allowed for an additional 10 years, so I will have to deal with these for at least 3 more years. My only income is from disability and both it and my home are not allowed to be used to settle the judgement, so in effect there is nothing for these companies to gain from the judgments. I will not be able to return to the work force but I do need to do repairs on my home., but any loans I would take could be subject to a garnishment., as would be any interest in a car that exceeds a very low minimum. I have recently been able to get credit and my credit score is in the 670 range.
Would it be advisable to contact the 2 companies and ask them to settle the judgments for a small fee that I can afford. Will they realize that they have no hope of collecting and take something rather than getting nothing? Will this letter reopen the debt and put it back on my report?
Thanks in advance for any help you can offer.
Your letter would not reopen the debt and allow it to be placed back on your credit report.
Judgment creditors are indeed often willing to settle, and the rate of savings, in my experience, is better the longer the judgments have sat unpaid, and when you do not appear highly collectable, and your only source of income being disability makes you look less so.
What are the balances on the judgment?
Who were the plaintiffs?
The original judgments were for $3,000 to FIA Card Services and $11,000 to LVNV. I hear from them via mailed letters about once every 4 or 5 months with offers to settle for the original amount of judgement. Thanks for you help with this.
If you really hammer the long term disability and fixed income scenario, you may be able to get a better settlement out of LVNV, and less likely with FIA, but not impossible.
Realistic settlement targets are 50% here. Moon shot savings would be around the 20% range.
Thanks Michael. I will let you know what develops.
My wife recently received a wage garnishment for a judgement that was entered in NY 11 years ago. She lives in California and apparently the law firm was able to to acquire a sister judgment to collect. She was never contacted or served in regards to this law firm acquiring this debt and enforcing the judgement aas it was over 10 years ago. The law firm says the represent the property management company who originally sought judgement(This property management company no longer exists and has not for 5 yrs). She tried to contact this property mangement company 4rs ago and found out they no longer exist and when she asked of the debt owed which was based on a rental agreement in. She was told that the new property management company knows nothing of this debt or judgment..I beleive the law firm is a purchaser of junk debt and purchased this debt becasue they saw that there was a judgment. When we tried to negotiate a settlement with the firm they keep saying they have to see if their client would accept the offer and has not returned the phone call. This debt is not on her credit as it fell off years ago.. She initially paid on the debt but became unemployed and could not pay.Her contact with the company 4yrs ago when she became employed was an effort to settle the debt.She is now 7 months pregnant and has filed exemption from the debt as her expenses are in excess of her income. Our bank accts are totally seperate..Do you believe she has a godd case for exemption as when she goes on maternity leave she will receive no pay and the 25% garnishment has left her with the inablity to pay rent. I am a contractor and my income is very sporadic as I work when the work is available.
I cannot say whether she will qualify for full or partial garnishment exemption. From the details you provided, it sounds like it.
I just received a letter in the mail with a notice of a levy on my bank account. They say I now owe just over $6,00o. (Old credit card I owed but lost my job and couldn’t afford making payments.) I am making minimum wage and own an old truck that I need to get to work. I’ve offered to make payments in the past but they were not willing to negotiate much. I don’t want them to garnish my wages. Is there a minimum amount that I can earn before they are not allowed to garnish my wages?
Sandy – Post the state you live in and your question about collection risks in the comments over here: https://consumerrecoverynetwork.com/question/social-security-pension-state-exemption-debt-collector-garnishment/
If I have not covered your state in the comments already, I will post a through outline in reply to your comment over on the other page.
Hello. I received papers from court (it says summons) Saturday June 21, 2014. And now have 28 days to respond… The lawsuit is for $2,667.00 for a credit card debt from Capital One. I live in Ohio. I work part-time only for $500 a month before tax being a stay-at-home mom. My husband is self-employed. We don’t have any property, renting an apartment. We have 2 cars financed, one is on my husband’s name and second one is on my and his (we had to get second car because my husband got into accident and car was a complete loss). We have a couple of joint bank accounts. Isn’t it late to take my name off those accounts? I have one bank account which is on my name. Do you think it’s possible to settle with the Cap One representative and what % it’d be? I admit I owe the money, but at this moment I really don’t have an opportunity to pay it off. I will try to borrow some money if it’s possible to stop the case at this point and settle. Thanks!
It is possible to settle with Capital One right now. Once sued, it is more realistic to expect closer to 70 percent (give or take 10%), if any reduction at all. Can you pull together that much?
No, you can still take your name off of joint bank accounts. Your risk of bank levy is only real when a judgment is entered, so no need for that if you are successful with negotiating a settlement.
Thank you so much for your reply! Unfortunately, I won’t be able to get that much… I’m hoping for $1,500 maximum. Do you think it’ll be possible to make payment arrangements if they don’t agree to my proposal amount? Or is it better to wait till the judgement is entered?
And I’m really confused as of what my next step is… Do I call Cap One attorney and negotiate and then send a written answer to the court? Or if we come to agreement Cap One will close the case and I won’t have to send an answer to the court?
Thank you!
1500 is possible if you have hardships. Your collectability score sounds like it would be low, and you will have to negotiate well. Just be ready to hear no, or a counteroffer that puts a deal out of reach.
You can indeed set up payment arrangements that are affordable, but often only because you concede to the judgment, which can also ding your credit further. Having a deal you agree to, that you know you can afford monthly, will usually mean no balance reduction, but prevents lien, levy, and garnishment in many instances.
If you want to negotiate now and see if you can avoid court, call the attorney. That could result in what you want – the matter being closed. You also have the option of answering with affirmative defenses that would prevent default and summary judgment, which can buy you time to come up with more money to settle too.
I do recommend working with an experienced debt collection defense attorney.
Thank you so much for the information!
Do you possibly know how much the amount I owe now will increase after the judgement is entered in case I proceed with the court? I believe it’s going to result in judgement anyway since I owe the money?
And could you recommend an attorney in Cleeland, OH?
Thank you!
The amount you owe can increase as a result of legal collection costs, and judgment interest that will be set by the court. I do not know your courts, so it is hard to offer an estimate of how much.
I sent you an email with contact info to 3 attorneys in Cleveland with collection defense experience.
Thank you! I appreciate your help!
Hello Michael. Have to ask to your advice again… I’m not really in the situation when I can get an attorney, so I have to handle this on my own. I called the debt collector and they are willing to set payment arrangements with $100 a month (did not really negotiate that amount, started with $50 and they wanted $140. Do you think it’s possible to get it lowered? The lump sum they want is $2,500 smth but I’m sure I’d get it lower if I had money to settle which I don’t). I have not agreed to anything. They said my balance is now $2,787 (which includes court fee for filing or smth). And they also said there would be 3% interest on the balance. My question is if there’s any sense in making arrangements with debt collector if they are going to get a judgement anyways and there’s same 3% interest on the balance? Is it better to go to court and then negotiate with the court?
Oh and one more thing. They asked which bank I use. Is it bad that I told them my bank name, would they have access to bank information? I’m worried because we still have joint account with my husband. Thank you!
Telling them your bank name means they do not have to take the additional step of trying to locate it themselves. But they would have done that, so no, you do not do any harm. And you can take your name off of that joint account with your husband.
Can you get lower monthly payments if you participated in the court process? Yes. Will you though? I cannot say. Each state has exemptions from judgment creditors. Ohio protects 75% of your wages; about 3500 value of your car; 125k equity in your home; about 11.5k of value in your household stuff; and about 400 dollars in your bank account is protected from judgment creditors in Ohio.
You can get additional protections from the court based on income and expenses, but that usually is something that comes into play after a judgment is entered. By showing up for court, and participating in the process, you could get a more affordable monthly payment out of the attorney for Capital One in person and in front of the court. But just know that their main goal is to secure an enforceable judgment.
Payments can be set up now, at court, and after judgment. The benefit of reaching an agreement and sticking to it, at least at this stage of collection, is that you do not have to look over your shoulder. That said, do not agree to something you cannot afford, or are 100% confident you can pay each month.
Thank you so much for your answer!
One more thing I’d like to ask… I think I’ll go with payment arrangements. As I understand I’ll have to sign agreement that in case of default on monthly payments judgement will be entered automatically. Is there a possibility to negotiate the judgement then or there will be no opportunity to do that and my wages will be garnished and whatever comes with the judgement. Thank you again!
In my experience, you can negotiate collection accounts at all stages, and even when you fall of a payment plan. But that is mostly from a lump sum payment negotiation, so when you are coming up with an amount they will accept as payment in full (even though you are paying less).
Once your wages are garnished it is difficult to get any reduction of balance negotiated, or lower payments. They have all the leverage and will get paid as long as you are at the job, unless you successfully contest the amount you are being garnished through the court.
my husband received a summons to appear in court for a cc debt in the amount for roughly $1250 (Amer Airlines CC). we didn’t have the money beforehand to make any sort of deal or payment plan with the attorney trying to collect the debt. the court date is tomorrow and luckily we have come into some extra cash (around $800). what is typically bare bones minimum % some of these attorney will agree to as far as a lump sum payment goes? also, what do we need to bring with us to prepare for something like this, should we have a certified check in hand and say “here’s what we can pay you, right here right now”. if we offer to settle for lesser, will they still try to get info into seeing our joint checking account? I am a nervous wreck and we have no clue what to expect. Thanks in advance for your help!
What is the court date tomorrow about? Have you answered the complaint and filed with the court?
The minimum you can settle debt for is a moving target. There are too many things to consider as to why someone would be able to settle for less than another with relatively similar looking scenarios on the surface. But the low settlements are often unrealistic if you are paying other debts on time (except for a car and home some times), and that fact shows on your credit reports.
If you are financial hardship is persistent, and you articulate that well, you could settle for the money you have available. Show up ready to disagree with anything the collector says, but be ready for an opportunity to discuss settling. If you do not get an agreement to settle tomorrow, there may be other opportunities, and for roughly the same amount (unless you look highly collectable).
Who is the bank/debt collector listed as plaintiff?
so apparently I got the situation wrong. love how i’m just finding out about this.
my husband missed the first hearing. Since he missed the first hearing, the judgement was cast. he hasn’t filed anything and if i was more aware of all of this from the jump, we wouldn’t be in this situation. I would like to also mention we are in MA, from my understanding they can enforce the law more? because we were notified that since he missed that hearing, he now has a warrant out for his arrest due to this small debt of $1200!! craziness!!
so now the court date is set for tomorrow. the plaintiff is US airways cc – which I believe is Barclay bank? will they require us to pay it in full now?
That’s a problem. Just be sure to show. You can still settle, and perhaps for the amount you have available, but the same thing applies – how collectable you look to them.
hello, does it matter who the court papers were given to and where or not I was even living in the state at the time?
I am not sure how much it would matter if we are talking about the situation you posted about last week. You have already been garnished on the judgment. What were the dates of the garnishments?