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Business Debt/Negotiating a judgment lien settlement

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Expert: - 11/16/2008


Question
Dear Ms. Dunn --

We have a judgment lien on our home (for an unsecured debt) that is eight years old.  The original judgment was for $40,000.  With interest, we now owe about $80,000 on the judgment.  

I am trying to sell our home as we need the proceeds to cover the cost of my husband's care (he has advanced Alzheimer's). If the judgment lien and interest is paid in full out of the escrow when our house sells, I will not have the funds I need to take care of my husband or place him in a nursing home.

Is it possible that even though the law firm/collection agency has a right to $80,000, they would be willing to negotiate and possibly settle for the original $40,000?  

If they won't reduce the amount, my only option would be to file Ch. 7 bankruptcy and liquidate the house. Between the outstanding mortgage and our exemption, there would be little if anything left for the judgment lienholder at all.

How would I even approach the law firm/collection agency about considering a settlement?  And do I approach the company whose name is on the lien, or their law firm (Harris & Zide)? Do collection agencies ever settle for less than the amount of an outstanding judgment lien?  The whole thing scares me and this agency has a reputation for being pretty ruthless.

Any advice or words of wisdom would be deeply appreciated.  Thank you!

Answer
Julia,
I would highly recommend you visit an attorney for a free consultation or visit the courthouse that holds the judgment and ask them about this.  It is my understanding that once a judgment is granted and recorded, there is no way to reduce it.  Based on that, I would seek the advice of an attorney before contacting the judgment holder.

Good luck to you.
Sincerely,
Michelle Dunn

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Michelle Dunn

Expertise

As one of the Top 5 Women in Collections, one of the Top 50 Collection Professionals, and winner of the Business Excellence award, I can answer any questions about debt, debt collection, improving business credit, creating a credit policy, enforcing a credit policy and collecting on past due accounts. I can also answer questions in regards to starting a debt collection agency since I have been a bill collector for over 24 years, started and ran my own collection agency for 8 years, and maintain my 12 year old Credit & Collections Association for members of the credit & debt collection industry. I am also the author of the popular and award winning book "Starting a Collection Agency, how to make money collecting money" now on it's 3rd edition. This book has won a the Writers Digest self published award as well as the New York Book Festival Award. I am a repeat contributor to the Wall Street Journal, and have been featured on NPR, CNN, as well as many other national radio and television programs. I have also been featured in national publications such as the Wall Street Journal, Forbes, Smart Money, MSNBC and much more. I have 17 published books to my name and am an accomplished speaker and consultant. I currently write 9 columns for newspapers, magazines and online portals worldwide.

Experience

I have over 24 years experience in debt collection, I started and ran my own collection agency for 8 years and I am the founder & owner of my Credit & Collections Association that I founded in 1998. www.credit-and-collections.com

Organizations
My Credit & Collections Association, I was also a member of the American Collectors Association and Plymouth Chamber of Commerce for 11 years. I am a member of many writing groups as well as my local Women Inspiring Women chapter. I am a member of Know More Media as an expert for their blog on business credit.

Publications
Business NH Magazine, Smart Money Magazine, MSNBC, CNN, Forbes.com, The Wall Street Journal, Home Business Magazine, Entrepreneur Magazine and website, many books, newspapers and television programs as well.

Education/Credentials
I have written 17 books in my collecting money series and one for Entrepreneur Press called the Ultimate Credit and Collections Handbook. My newest book is being published by John Wiley & Sons in May titled, The Guide to Getting Paid, how to weed out bad paying customers, collect on past due balances and avoid bad debt. This book is also being sold to many colleges as a text book.

Awards and Honors
My book Starting a Collection Agency, how to make money collecting money won an award from Writers Digest and the 2007 New York Book Festival in the "How to" category. I have won 2 awards from Dun & Bradstreet and Governor Jean Shaheen. I was nominated as one of the Top 5 Women in Collections twice as well as having been selected as one of Collection Advisor's Top 50 Collection Professionals by my peers.

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