Each region has laws about paying a judgment settlement, but basic steps can be taken in most cases to settle the debt. A court-ordered judgment for monetary damages works the same, regardless of what the original debt was for. While a judgment can have serious negative credit consequences, not paying it off can trigger additional problems, including wage garnishments, property seizures, and jail.
Once a judgment is granted, the debtor owes the debt, and it must be paid. Regions place different statutes of limitations on judgment collections, ranging from two to 20 years in some areas. A judgment means a court official has heard the evidence and believes the debt is owed. The judgment is then entered in court records. If the judgment is not paid, some regions allow the creditor to order the debtor back into court to discuss his or her income and assets; failure to attend the asset hearing can cause the debtor to be arrested.
Paying the entire judgment settlement at once is the easiest way to resolve the matter. When the court entered the judgment amount, court costs and attorney fees were added to the debt total. The debtor can contact the creditor and pay directly. A receipt should be requested, proving the judgment has been paid in full. If the creditor does not contact the court after receiving payment, the debtor can do so by providing evidence of payment and requesting the judgment be marked as paid in full.
If unable to pay the judgment settlement in full, the debtor can contact the creditor and request a payment arrangement. Creditors typically want to avoid the cost and hassle of collection efforts, and usually will work with a good-faith debtor who wishes to make regular payments. Interest does not stop accruing while payments are being made; to keep interest to a minimum, the defendant should arrange to make the largest regularly scheduled payments possible.
Some regions, including the state of Tennessee, allow a slow-pay provision for those who cannot satisfy a judgment in the time frame the creditor demands. The debtor files a slow-pay motion with the court of record holding the judgment. The motion sets a hearing date, when the debtor explains to the judge how much income the debtor receives each month, what bills the debtor must pay, and how much is left over. If the judge agrees that the payment amount expected by the creditor will cause undue financial hardship on the debtor, the judge will order a reduced payment amount, called a slow-pay order. The entire judgment must still be paid, but will be paid at a slower rate.
For debtors who do not wish to have more contact with the creditor, most regions allow the judgment settlement to be paid in a one-time lump sum to the court where the judgment was granted. The court clerk then forwards the payment to the creditor. Most courts are not set up to receive monthly judgment settlement payments.