If a creditor sues you over a past-due debt and wins, it results in a judgment. This is essentially a court order stating that you need to pay the creditor what you owe. But what if you can’t afford to pay the entire amount immediately? Can you make payment arrangements after a judgment?

It’s possible, but the process can be complex. So, if you’re interested in arranging a payment plan after a judgment, read on to learn how.

In a debt lawsuit, a judgment is a court’s formal decision about who owes what to whom. Let’s say you borrowed money and defaulted on that loan. The lender or company you owe money to (the creditor) can sue you in court to get you to pay. 

If the court agrees with the creditor, it will issue a judgment stating that you legally owe them a specific amount. This amount can include what you originally owed and additional charges like interest, court, and attorney fees.

Getting a judgment against you in a debt lawsuit is a serious matter. It means you must legally pay the money back within a certain timeframe. If you don’t, the judgment creditor can take further steps to get the money from you. This may include garnishing your wages or freezing your bank account. An unpaid debt like a judgment can also harm your credit score. Poor credit can make it harder to borrow money, rent an apartment, or even get certain jobs in the future.

How a Judgment Happens

Here’s a closer look at the judgment process:

How a Judgment Affects Your Finances

A judgment in a debt lawsuit can have several negative effects on your finances, both immediately and in the long run:

Can You Make Payment Arrangements After a Judgment?

If a judgment is entered and you don’t have the funds to pay what you owe, it may be possible to negotiate a payment arrangement directly with the creditor. However, your negotiating power is often weaker post-judgment compared to before a judgment is issued. At this point, the creditor already has the legal backing of the court to enforce payment through methods like wage garnishment, bank levies, or property liens. Many creditors are still open to payment arrangements after a judgment for several reasons.

For one, even with a judgment, collecting the money can be time-consuming and expensive for the creditor. They might prefer a voluntary payment plan over having to go through additional legal steps. A payment plan also offers the creditor a more reliable stream of payments rather than the uncertainty of forced methods like garnishments.

Here are some steps you can take to improve your chances of a successful negotiation:

Take Stock of Your Current Financial Situation

First, have a clear understanding of your financial situation. Know how much you can realistically pay monthly without compromising your basic living expenses. This will serve as your baseline for negotiations.

Initiate Contact

Reach out to the creditor or their legal team as soon as possible after the judgment. The sooner you contact them, the more willing they might be to negotiate. When you make contact, express your willingness to settle the matter and ask if they’re open to a payment arrangement.

Make a Reasonable Offer

Make an initial offer based on your financial analysis and anything you may have learned about the creditor’s preferences. It’s generally best to start with a payment plan you can adhere to, even if it seems low. Making consistent payments is much better than defaulting on a more ambitious plan.

Put Everything in Writing

If the creditor agrees to a payment arrangement, get all the details in writing. This should include the total amount to be paid, the due date for each payment, any penalties for late payments, and any other terms. Both parties should have a signed copy.

If you haven’t enlisted the help of a debt relief attorney up to this point, it would be wise to consult a debt help attorney who regularly does this. Have them review the agreement before finalizing any payment arrangement, especially after a judgment has been entered. The right legal advice can ensure you’re not agreeing to unfavorable terms and that the agreement is enforceable.

Stick to Your New Plan

Once the arrangement is agreed upon and formalized, stick to it. Missing payments can lead to more severe actions, like wage garnishment or property seizure.

Remember, the specific procedures and laws can vary depending on your location. Again, it’s a good idea to consult a legal professional to guide you through this process.

Tayne Law Group Can Help

Tayne Law Group is a New York-based law firm assisting individuals and businesses with resolving their debt issues for over two decades. If you are receiving calls from debt collectors, recently had a judgment entered against you, or need help with a delinquent debt before it becomes a debt collection lawsuit, contact us for a free, no-obligation phone consultation with a specialist from our team. Call today at 1 (866) 890-7337 or fill out our short contact form. We never share or sell your information, and all conversations are confidential.