Negotiate settlements for a judgment?

[may2281]

What is the name of your state (only U.S. law)? New Jersey

I split from my ex 8 years ago and had a mess left on my credit and have been slowly trying to repair it. I now have pretty good scores but have 3 judgments on my credit reports for approximately $10,500 total. The judgments were entered in 2008 and 2009.

These are amounts that my ex ran up and then never paid (my fault, because they were solely in my name). However, I want to try to clear these up and remove them from my credit report as I would like to try to purchase a house in the future.

Is it possible to negotiate a settlement on judgments? I've been told that these debts were usually purchased for cents on the dollar by debt collectors and it may be possible to settle for less. Could this be true?

Just looking for a little advice on the best way to go about tackling these.

Thank you in advance.

 

[single317dad]

Yes, it is always possible to negotiate a settlement for a smaller amount.

If the original creditor (the lender) is the owner of the judgment, your debt was not sold. If it's some other company you don't recognize, then it was indeed bought at a discount. Either way, you should be able to bargain with them (and a little known fact is that you can do that before you default on most unsecured debts). Try offering a lump sum of about 10% to start; I'd expect to settle around 30-50%.

Make sure any agreement includes a release and satisfaction filed with the court by the judgment holder.

 

[bdancer]

You should also understand that paying won't get the judgments removed. They willl just be updated to show paid. They remain or the balance of the reporting period which is 7 years of your state's statutory max for judgments, which ever is greater.

Also, if no one has been contacting you about these debts, contacting them may stir up the collection process. Since the judgments can be used to garnish your wages, attach bank accounts, and personal property, they may not be so willing to accept settlement for less ... no matter how cheaply they purchased the debt. Unless you are very good at negotiating, I don't think you willl get a settlement any where near 10%. More like maybe 70%.

 

[single317dad]

The problem with "not stirring the pot" is it doesn't get OP any closer to cleaning up his/her credit. Judgments can be collected for up to 20 years in NJ, and that period can be extended multiple times, so a judgment can easily follow a person around for life. Not to mention that while a frozen bank account now may be a nuisance, having an additional lien placed on one's home later would be far more so (and in fact, in my state it's quite a chore to even sell a home if you have any open judgments, even if they don't specifically place a lien on the home). If OP wants to buy a home, getting this resolved first is the only course of action.

I would recommend OP not bother to negotiate until he/she has a significant amount of money available to pay - don't come into negotiations with a "payment plan". You'll get a lot farther with a stack of cash than with a promise. I recommend 10% as a starting number for a JDB because many of them purchase debt well below that - in the 2-5% range. In fact, many send unsolicited offers to debtors as low as 25%.

 

[bdancer]

The problem with "not stirring the pot" is it doesn't get OP any closer to cleaning up his/her credit. Judgments can be collected for up to 20 years in NJ, and that period can be extended multiple times, so a judgment can easily follow a person around for life. Not to mention that while a frozen bank account now may be a nuisance, having an additional lien placed on one's home later would be far more so (and in fact, in my state it's quite a chore to even sell a home if you have any open judgments, even if they don't specifically place a lien on the home). If OP wants to buy a home, getting this resolved first is the only course of action.

I would recommend OP not bother to negotiate until he/she has a significant amount of money available to pay - don't come into negotiations with a "payment plan". You'll get a lot farther with a stack of cash than with a promise. I recommend 10% as a starting number for a JDB because many of them purchase debt well below that - in the 2-5% range. In fact, many send unsolicited offers to debtors as low as 25%.

I agree ... just pointing out that some of these JDB will come on very strong and are not so easy to work with.

 

[TigerD]

Read the sticky on negotiation.

DC

 

[single317dad]

Read the sticky on negotiation.

DC

That's an excellent post, which I had never bothered to read until today.