Expert: Kathleen Eads - 11/1/2006

Question
Dear Ms. Crabtree:  My boyfriend incurred substantial debt and stopped paying on his credit card during employment hardships.  He received multiple collection notices, and finally lawsuit notices.  He never took action during that time so finally a judgement was issued against him and his assets were frozen.  He cannot afford the total amount so I suggested that he call and try to negotiate a new settlement amount.  When he called, they told him that they were not able to negotiate because the judgement has already been issued, and his only recourse is to pay the full amount.
My question:  Is the judgement really the end of the road or can they still negotiate if they want to (should we keep trying)?  Also, what happens if he doesn't pay - aside from not having access to his bank account, are there any further consequences?  Finally, will the SOL run out on a judgement just like it does on a delinquent account?
Thank you very much for your time

Answer
Angie,

You can ALWAYS attempt to settle debts, but it's up to the creditor as to whether or not they want to accept the proposal.  With the judgment already in place and his accounts frozen, they can now extract funds until the debt is cleared; in other words, why settle when they can attempt to get the whole amount?

Keep in mind also, settlements can be subject to income tax (if you owe $1000 and you settle for $500, you might have to claim the $500 forgiven as income and pay taxes on it).  

I've included a link dealing with statute of limitations.  Judgments extend statutes and creditors often renew these judgments so that they run longer.  

http://www.cardreport.com/laws/statute-of-limitations.html

Judgments allow for many kinds of recourse...bank account liens, wage garnishment in some states, asset liens (attaching property) etc.  It depends on where you are located and your state laws.  

Hope I've answered your questions.  Read on the link above.  This should clear up some things for you, as well.  

Kathleen Crabtree-Eads