Paying a judgment in a lump sum is the least expensive option. If you can’t afford a lump sum, a payment plan is a common alternative solution.
If you lose a civil court case, you become a judgment debtor and owe monetary damages to the person or company who won the case. In most cases, the award also will include court costs and accruing interest. The longer you wait to pay a judgement, the more it will cost and the more likely the creditor may be to collect on the award by garnishing your wages. While the rules vary in different jurisdictions, most courts allow judgment creditors to file a garnishment request unless you pay the balance or make payment arrangements within 30 days of the award date.
The Consumer Financial Protection Bureau recommends that you contact an attorney for advice or assistance if you need help or have questions.
Evaluate Your Financial Situation
Paying the judgment in a lump sum is the least costly option. You’ll still owe court costs but you won’t have to deal with accruing interest. However, if the amount is more than you have on hand or in savings, a personal loan or an installment payment plan are additional options.
Contact the Judgment Creditor
If a payment plan is the only option you have for paying the judgment, contact the creditor and ask about setting up a formal payment plan. If the creditor won’t agree, file a motion to set up a payment plan with the court that issued the judgment. Contact the Clerk’s office for the forms and instructions, or file the motion and a financial statement online if your county offers the option.
Make sure that any agreement between you and the creditor is in writing. According to the Judicial Council of California, a written agreement should include payment due dates and specify whether there is a late payment grace period, how interest will accrue, and what form of payment the creditor will accept.
Review the Judgment Award
The judgment documents will specify whether you pay the creditor directly or through the court. If the judgment must be paid through the court, it may include a form to use for making payments and specify who you should make the payments to.
Make sure you keep detailed records and proof of your payments.
Get a Satisfaction of Judgment Release
Once the judgment is paid in full, the court will file a satisfaction of judgment if you make payments through the court. However, you may need to ask the creditor to file a satisfaction of judgment or contact the court yourself if you pay the creditor directly.
A satisfaction of judgment is a critical document because judgements are public records. Credit reporting agencies will continue to show the full amount of a judgment as open until the satisfaction is filed.