Money judgments are the result of civil court cases in which monetary awards are ordered by the courts. One case might involve a financial award after a car accident while another awards an outstanding balance plus interest and fees in a debt collection action. The ultimate goal is to ensure that the judgment is satisfied while the rights of both parties are protected.
Here is the interesting thing: satisfying a judgment does not always mean paying it in full. There are multiple ways to achieve legal satisfaction.
Full Payment (always qualifies)
The first and most common form of money judgment satisfaction is payment in full. A full and complete payment always meets a judgment’s legal obligations. But even with full payment, there are options.
Immediate payment could be offered at the conclusion of the court case. Judgment Collectors, a judgment collection agency based in Salt Lake City, Utah, says such payments are rare in their industry. But full and immediate payment does happen from time to time.
Full payment via an installment plan is another possibility. This is more common, according to Judgment Collectors. Judgment debtors voluntarily agree to monthly payment plans. They continue paying until the debt is fully satisfied.
Partial Payment (sometimes qualifies)
A partial payment could qualify as satisfaction as long as the judgment creditor agrees to it. Again, there are two possible scenarios. The first involves the debtor offering an immediate, lump sum payment in exchange for the creditor accepting a lesser amount while still considering the judgment satisfied. Maybe the debtor and creditor agree on 50%.
The other potential possibility is paying a lesser amount by way of a payment plan. Instead of accepting a 50% lump sum payment, the creditor agrees to accept 75% paid over the course of 60 months.
Judgment Expiration (always qualifies)
A third possibility is a judgment expiring when it reaches its statute of limitations. In nearly every state, expiration carries the same legal weight as satisfaction. Once a judgment expires, it is no longer enforceable. Allowing a judgment to expire equates to a creditor giving up his legal right to collect.
Note that in some states, exploration automatically means legal satisfaction. As far as the law is concerned, an expired judgment has been satisfied by the debtor – even if no money ever changed hands. It boils down to a simple premise: the creditor had 5-20 years (depending on the state) to collect and failed to do so. Time’s up.
Judgment Creditor Responsibilities
If a creditor chooses to let an unpaid judgment expire, no further action is needed. The judgment is considered either unenforceable or fully satisfied. But if one of the other two options is exercised, the judgment creditor has a responsibility to file a notice of satisfaction with the same court that originally entered the judgment.
This notice of satisfaction informs the court that the creditor considers the debt paid in full and will no longer be pursuing collection efforts. Any future attempt to file a property lien or ask for a writ of execution would be invalidated by the court.
What happens if the creditor fails to file the notice? The debt is still satisfied if it has been paid in full. Debtors should always document payments and hold on to their records for 7-10 years after the fact. Records are their protection if a creditor ever tries to resume collection efforts.
Generally, satisfying a judgment means paying it in full. But there are the exceptions discussed in this post. There are ways to satisfy a judgment without paying the entire debt.
