Recently, a client came to us after having a considerable judgment entered against his company. Fortunately, we negotiated a settlement agreement to satisfy the judgment for less than the full amount owed. Bankruptcy is not the only option.
A money judgment may be satisfied either upon full payment of the amount necessary to fulfill the judgment or the judgment creditor’s acceptance of a lesser amount in satisfaction.
For judgment satisfaction purposes, the debtor may pay with cash or the tender and acceptance of a promissory note. Often, cash is not available, so that payment terms may be the only alternative.
Therefore, our objectives are to negotiate to satisfy the judgment for less than the full amount owed. On several occasions, we have successfully had a judgment creditor provide an “Acknowledgment of Satisfaction of Judgment” based on an agreement to accept less than the total amount. In some instances, we can negotiate for the judgment creditor to deliver the Acknowledgment to the judgment debtor before the judgment’s satisfaction. In return, typically, the judgment debtor will agree to furnish security and execute a promissory note.
However, obtaining the Acknowledgment is often just the beginning of satisfying the judgment for less than the full amount owed.
Ensure that the Acknowledgment was filed correctly with the court.
Also, most judgment creditors will record an abstract of judgment. An abstract of judgment creates a judgment lien on the debtor’s real property. Suppose an abstract of a money judgment was recorded in any county. In that case, an Acknowledgment must also be recorded in each county where the abstract was recorded to release the real property judgment lien. The failure to record an Acknowledgment may result in the delay of closing escrow years later.
Similarly, the judgment debtor may need to file the Acknowledgment with the Secretary of State. This filing extinguishes a judgment lien on personal property.
Even if you’ve had a judgment entered against you or your company, you still have options. Bankruptcy is not the only option. Hiring the right attorney can make the difference between paying the full judgment or a lesser amount. Contact our office today, as soon as possible to negotiate down your judgment without having to commence bankruptcy proceedings.