After the lawsuit you may be surprised to find that the amount of the judgment is far higher than the original debt. This is because court and attorneys fees were added to the balance. Many states also allow the creditor to charge post-judgment interest as well. Because the debt can be large and the collection action severe, know the various methods for handling a judgment and choose the option that makes the most sense for you.
- Pay in full
You can, of course, pay the debt off at any time. To pay, use a personal check, money order, or cahier’s check. If you must pay with cash, be sure to get a receipt. Once you have paid the total balance, obtain a Satisfaction and Release of Judgment form from the court or the court’s website. Have the judgment creditor sign it, make and keep a copy of the completed form for your records and file the form with the court. If the creditor has placed a lien on your property, they will lift it when you satisfy the judgment. You can also save your property from a levy if you are able to come up with the money before your assets are seized.
- Offer an installment plan
For judgments too large for you to pay in full, you may be able to pay in regular installment payments. Determine the amount you have to pay the judgment on a monthly basis. Be conservative – never offer more than you can really afford. Put your payment plan in writing and ask the judgment creditor to agree to it. If you can persuade them to take your offer, you may be able to avoid a garnishment or other collection methods.
- Pay via the garnishments
If your wages are being garnished, you can leave the situation as it is and have the debt run its course. Eventually, you will repay the balance this way. However, if the payment is causing a tremendous strain on your finances, you may be able to modify the garnishment by filing a claim of exemption. You would usually do this when your employer first presents you with the earnings withholding order, though you can file the paperwork at any time. The information and instructions for filing a claim of exemption are on the earnings withholding order. If your claim of exemption is accepted, you will receive a modified order.