Summary Judgement Help! California

[Piggy D]

So, i entered into a creditor agreement for a debt I owed. The amount was for $10,000 (approx). I was very happy to get this, and I believed the company was being fair and reasonable with me, essentially offering me a payment plan. As part of my loan agreement I was required to sign a Summary Judgement. I wasn't worried about this at the time, as i had every intention of paying what I owed.

However after missing 1 payment, and late on another they want to invoke the Summary Judgement! I dont deny owing the money, but talking to others they suggest the interest rate I am paying is too high, but the company argues my debt agreement stipulated a default interest rate (29%) to reflect my actual "credit risk". My credit score is 530, and this will just make it worse.

I tried to co-operate, and signed a letter earlier today admitting I owed them the money, (I dont deny that), but what can I do? Options? Advice? I dont want a worse credit rating, or to have my stuff taken. Plus if they file the Summary Judgment i think i will owe them more money, as then I have to pay legal fees too!

Unfair!

 

[justalayman]

Well, since you signed an acknowledgment you owe the debt, the can obtain a summary judgment. Then there will be a judgment against you.

One good thing; your interest rate will drop to 10%.

The bad news; you get to pay court costs and legal fees.

And yes, a judgment is likely to make your credit score worse.


But you’re going to have to tell me what’s unfair about a creditor wanting the money you originally promised to pay them. If you had been fair and paid what you promised to pay you wouldn’t be in this situation.

 

[Piggy D]

Well, since you signed an acknowledgment you owe the debt, the can obtain a summary judgment. Then there will be a judgment against you.

One good thing; your interest rate will drop to 10%.

The bad news; you get to pay court costs and legal fees.

And yes, a judgment is likely to make your credit score worse.


But you’re going to have to tell me what’s unfair about a creditor wanting the money you originally promised to pay them. If you had been fair and paid what you promised to pay you wouldn’t be in this situation.

Well the interest rate drop is great! Thanks! Whats unfair, is this heavy handed approach, I am agreeing to pay, just want more regular terms. They say when i miss a payment (and i pay, just might be a little late), that they can charge defualt fees etc.

I just dont want them using the Summary Judgement thing against me.

I am also nervous as to what the court costs and fees are likely to be....

 

[adjusterjack]

Well the interest rate drop is great!

Not really.

You'll still have the default rate accruing until they actually go to court and get the judgment. When the get the judgment the lower interest rate will apply. What you have to understand is that they have the right to go to court and get the judgment but nothing obligates them as to the when. California gives them 4 years to file a lawsuit for breach of a written contract so they can drag out the default interest rate as long as they want within that 4 year limit.

Whats unfair, is this heavy handed approach,

Nothing unfair about it. If you stiffed me on a $10,000 debt I'd jump on you with both feet and make your life as much of a living hell as I could do within legal boundaries.

I am agreeing to pay,

Talking about paying is not paying. Paying is paying. Creditors don't care what you say. They care only about money coming in.

just want more regular terms.

You have no leverage. You're the bad guy. The time to negotiate better terms was before you took the money and went out and spent it.

They say when i miss a payment (and i pay, just might be a little late), that they can charge defualt fees etc.

Paying a little late is like being a little pregnant or a little dead. You are in default as soon as you are late and can and will be charged the default rate.

I just dont want them using the Summary Judgement thing against me.

Then pay the full payment on time, every time.

I am also nervous as to what the court costs and fees are likely to be....

I'm guessing that your contract has an attorney fee provision. Attorneys average about $300 per hour. Doesn't take long to run up a thousand or two in attorney fees and the longer you drag this out, the more work the attorney does, the worse it gets.

 

[Zigner]

I am agreeing to pay, just want more regular terms.

Because you've proven yourself so trustworthy in the past, right?

 

[latigo]

Well the interest rate drop is great! Thanks! Whats unfair, is this heavy handed approach, I am agreeing to pay, just want more regular terms. They say when i miss a payment (and i pay, just might be a little late), that they can charge defualt fees etc.

I just don't want them using the Summary Judgment thing against me.

I am also nervous as to what the court costs and fees are likely to be....

Legal fees?

If the agreement provides for the addition of legal fees should you default (which I will assume is the case because of your earlier statement that you "will have to pay legal fees too.")
THEN . . .

You can make a strong argument that the only legal fees that can be tacked on to the judgment are those incurred in the process of preparing and filing the judgment with the court which should nominal. And none that were incurred in the negotiations and finalization of the agreement.

The logic for the argument being that the dollar figure stated in the agreement (that is, the figure the creditor settle for and you agreed to pay or suffer a judgment) constituted an "accord" with the entry of the judgment serving as the "satisfaction"element.

State another way - the creditor agreed to the compromised or settlement figure (a dollar amount which represented your entire obligation to the creditor) on the condition that you either (1) dutifully pay that amount in deferred payments as scheduled, or (2) consent to the automatic entry of a judgment in that amount.

 

[Piggy D]

Not really.

You'll still have the default rate accruing until they actually go to court and get the judgment. When the get the judgment the lower interest rate will apply. What you have to understand is that they have the right to go to court and get the judgment but nothing obligates them as to the when. California gives them 4 years to file a lawsuit for breach of a written contract so they can drag out the default interest rate as long as they want within that 4 year limit.

.

I get that, but they already have the Judgment. I had to sign a Summary Judgement back when I got the payment agreement. They said they would only use it if they had to.

Legal fees?

If the agreement provides for the addition of legal fees should you default (which I will assume is the case because of your earlier statement that you "will have to pay legal fees too.")
THEN . . .

You can make a strong argument that the only legal fees that can be tacked on to the judgment are those incurred in the process of preparing and filing the judgment with the court which should nominal. And none that were incurred in the negotiations and finalization of the agreement.

The logic for the argument being that the dollar figure stated in the agreement (that is, the figure the creditor settle for and you agreed to pay or suffer a judgment) constituted an "accord" with the entry of the judgment serving as the "satisfaction"element.

State another way - the creditor agreed to the compromised or settlement figure (a dollar amount which represented your entire obligation to the creditor) on the condition that you either (1) dutifully pay that amount in deferred payments as scheduled, or (2) consent to the automatic entry of a judgment in that amount.

Yes, I think I understand. Because I signed a Summary Judgement document from the beginning the legal fees should be simple/low. That is why I signed it at the start with the loan agreement.

 

[latigo]

I get that, but they already have the Judgment. I had to sign a Summary Judgement back when I got the payment agreement. They said they would only use it if they had to.

Yes, I think I understand. Because I signed a Summary Judgement document from the beginning the legal fees should be simple/low. That is why I signed it at the start with the loan agreement.

NO, you do not understand! You are much confused. So please listen.

Based on your posts this is what happened:

You and the creditor agreed in writing to a compromise figure of about $10,000 with interest accruing of 29% per annum.

Payment of the $10,000 in monthly fixed increments was stretched over a state period of time.

The terms of the agreement provides that should you fail to make the monthly payments as agreed the creditor can at its option and without further notice apply to the court for a money judgment against you in the amount of the unpaid principle and accrued interest.

As you have been told once your agreement to pay the $10,000 is converted to a judgment the interest rate on the balance will drop from the 29% called for by the agreement to California's statutory rate on interest judgments at 10% per annum.

So until the creditor exercises its option to obtain the judgment interest on the unpaid balance of the $10,000 will continue to accrue at 29% per annum.

In sum, there is no judgment against you at this time, but you continue to be obligated to make the agreed monthly payments and interest at the rate of 29% per annum continues to accrue.

Where you've gone astray here is thinking that what you signed was summary judgment when it wasn't. It is an agreement that a judgment can be entered in the future depending on your faithful performance of deferred monthly payment agreement.

 

[Piggy D]

But, I signed 2 things. One is an Agreement that acknowledges the debt and my plan to pay it back. The second is titled "Summary Judgment " and basically says I admit to the validity of the first agreement, and agree to having a judgment against me to be entered. Does that align with what you understood?

 

[PayrollHRGuy]

It doesn't matter. If they haven't gone to court yet there is no judgment.

 

[latigo]

But, I signed 2 things. One is an Agreement that acknowledges the debt and my plan to pay it back. The second is titled "Summary Judgment " and basically says I admit to the validity of the first agreement, and agree to having a judgment against me to be entered. Does that align with what you understood?

Almost but not quite exact. Your agreement to have a judgment entered against you was conditional upon your faithful performance of the payment plan. If you perform as agreed, there won't be a judgment.

And the fact that if a judgment comes down the creditor will receive far less interest should give you some leverage to renegotiate and bring the agreement current and with perhaps a reduced monthly figure within your reach.

You may also be a candidate for bankruptcy. That ten grand hanging over your head is going to start feeling like Chinese water torture. So it might be to your benefit to at least speak to a bankruptcy attorney guy. Most will give a first time consultation without charge. But you need to knock on their door, they won't come to yours.

Good luck and no more plastic!

 

[Piggy D]

Almost but not quite exact. Your agreement to have a judgment entered against you was conditional upon your faithful performance of the payment plan. If you perform as agreed, there won't be a judgment.

And the fact that if a judgment comes down the creditor will receive far less interest should give you some leverage to renegotiate and bring the agreement current and with perhaps a reduced monthly figure within your reach.

You may also be a candidate for bankruptcy. That ten grand hanging over your head is going to start feeling like Chinese water torture. So it might be to your benefit to at least speak to a bankruptcy attorney guy. Most will give a first time consultation without charge. But you need to knock on their door, they won't come to yours.

Good luck and no more plastic!

Thank you! But I really wanted to avoid bankruptcy and a judgement, so Update! Using some of the advice here about re-negoitaiting I gave that a go! They insisted that a default interest rate remain, but they cut it to 22.5%, and they agreed to extend my term by 12months, so I have 3 full years from now to pay this all off, and am all caught up now. So glad this is all behind me. Thank you everyone!