Managing Your Debt - Effectively Dealing With Judgments and Liens
Once a lien or judgment has been placed against you
, the only way to get rid of it is to either pay off the lien amount or reach a debt settlement with the creditor. How you approach the debt negotiation process can have a big impact on the final outcome.
Even if a court proceeding has begun, there is still time to settle. Ask the creditor's attorney, or have your attorney ask them, what amount it would take for you to settle the case. Your initial offer should be no more than 40% of the total amount you owe. Contact your local Legal Aid Society if you cannot afford your own attorney.
The creditor will save time and money in legal bills if a settlement is reached. This gives them good incentive to consider your offer. If you are unable to reach a settlement, the court can decide that you owe all or part of what the creditor is asking for. If that happens, a judgment or lien can be entered against you.
Once a judgment is entered, the creditor can being collecting the money from you either by garnishing your wages or seizing your assets and bank accounts. However, you can still approach the creditor about making a settlement. There is a good chance the creditor might agree because garnishing wages, waiting on a lien, and seizing assets is expensive. If you are finally able to settle the judgment at this time, make sure the creditor files the correct papers indicating the judgment is satisfied or discharged.
Some people are judgment proof, meaning they have little or no assets, no income, and basically nothing a creditor can take. If this applies to you, you may not want to make any attempt to settle your account. However, if you continuously accumulate judgments against you, it will be extremely hard to obtain credit in the future.
Whether you settle with your creditor or pay a judgment before, during, or after a court case, you must make sure you receive proof of payment and discharge. When negotiating a settlement, don't send any funds until you have legal documentation outlining the terms of the agreement and both parties have signed it. Retain a copy for yourself and then request a receipt, or proof of payment, from the creditor.
The creditor should then file a judgment or lien discharge with the court, but in reality they often don't consider this a priority. You might have to follow up and remind them of this responsibility.
If your creditor is the IRS, request a Certificate of Release of Federal Tax Lien for each lien against you that has been satisfied. The credit reporting agencies can verify the release of the liens by contacting the IRS.
Having liens or judgments against you is not an enviable position to be in. However, creditors want to put the matter behind them just as much as you do. Being persistent and assertive throughout all stages of the negotiating process can help you achieve a more positive outcome.
Managing Your Debt - Effectively Dealing With Judgments and Liens
By: Mark Andrade
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