A Stipulated Judgement May Actually Help to
Legally Improve Your Credit
Using a stipulated judgement is a little known secret that may help to legally improve your credit.
You may be in a situation where you have tried dealing with creditors to negotiate
credit card debt settlements. Or you may have
just received a summons and complaint from your creditor and
you fear the wage garnishment laws.
Well all is not lost. You may be able to use a stipulated judgment to your benefit. Don't be intimidated by
the term "stipulated judgement". It's just a legal term to describe your voluntary agreement to accept a judgement against you.
This can be a last minute opportunity to make a deal with your creditor for credit card debt elimination
with payments you can afford. Also, it may be a chance to avoid the negative reporting of a judgement on your
credit report and actually improve your credit.
One Client's Story
One of our clients had a $30,000 delinquent balance on a Capital One Visa credit card. Her finances had
changed so she was now 90 days delinquent in paying the $700 minimum monthly payment.
She called the credit card company and explained her circumstances and tried to negotiate a debt settlement.
The credit card company would only agree to a settlement of $$27,000 paid over 12 months. She obviously
couldn't afford this.
The account was then assigned to a law firm to continue their debt collection practices. They filed a
summons and complaint for judgment against her. At this point she sought help. We contacted their attorney.
The interesting thing is, now the credit card company was willing to accept a settlement of $12,000! They
agreed to waive all interest and fees and agreed to accept $4,000 down and payments of $100 per month.
So we put the agreed payment plan into a stipulated judgement that was then approved by the court. Once
she completes the payments, the case is dismissed and it never appears on her credit reports. However,
if she defaults on the payments, the credit card company can simply file an affidavit stating she defaulted
and they will be granted a judgment for the full $30,000.
But even if you failed to respond to a complaint and a default judgment has already been entered against
you, there's still hope. You may be able to get an order to set aside default judgment to help legally
improve your credit.
A stipulated judgement can be a great way to negotiate a debt settlement with an original creditor. It's
nothing new; it's done quite often. However, it may not work as well in negotiating with debt collection
How to Negotiate a Stipulated Judgement
- If your creditor files suit against you. Do not ignore it. Contact your creditor's attorney
immediately and offer a payment plan to settle the debt. You can negotiate a debt reduction, monthly
payment amounts, and even request to waive interest and fees. They may agree to your payment plan and
drop the suit.
- If their attorney doesn't agree to a payment plan, immediately hire an attorney or file an answer
yourself. If you decide to represent yourself, you may want to get a good legal self help book.
Unfortunately most people never file an answer to the complaint. They just accept a default judgment
and subject themselves to wage garnishment or garnishment of their bank account.
They don't know that
there's still a chance to make a deal in the courtroom.
- Send the credit card company a payment if you can. Any amount will due. It shows good will and may
later help to demonstrate to the court that you are trying to make an effort to pay your debt.
- Review your finances, make a budget and determine how
much you can really afford to pay each month.
Attend the hearing when scheduled and let the judge know that you would like to agree to a stipulated
judgment and explain how much you can pay. Remember, you can request a debt reduction, interest
elimination, and lower monthly payments.
However, I highly recommend you hire an experienced attorney to represent you if the matter goes to
court. If you appear at the hearing, it may actually hurt your efforts to negotiate a stipulated judgment
because you may be forced to take the stand and be grilled about your finances. Instead, an attorney could
appear on your behalf and successfully negotiate a stipulated judgment for you. Many times attorneys skilled
in these matters may already have a good relationship with your creditor's attorneys.
If successful in completing the stipulated judgment, the debt reduction should help to improve your credit
reports and credit scores. Also, you can always learn how to fix your own credit or hire a
reputable credit repair organization to help you legally improve your credit.
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