Agreed Judgments to Secure a Settlement

It is not uncommon for a creditor's attorney to request an "Agreed Judgment" when they settle on a pending lawsuit.

An Agreed Judgment is basically an agreement from the debtor business that they owe a specified amount to a creditor without going to court. Typically it will include the original amount claimed by the creditor, attorney fees, back interest on the debt and court costs for filing the original lawsuit.

When a creditor agrees to an out-of-court settlement after filing a lawsuit, this is their collateral for the settlement in case the debtor defaults on the settlement terms. It is used primarily when a payment plan is accepted by the creditor (rather than a lump-sum payment) and saves them from having to file a new lawsuit if the debtor business defaults on the payment terms with a settlement. Typically, the agreed judgment is dropped once all payments are received and they do not reflect on the client's credit report.

By signing an Agreed Judgment, a debtor business indicates they "agree" to the full amount due (plus extra expenses) if they do not comply with the terms of the settlement.

These are very common and should be expected under the above circumstances so let your clients know it is simply part of the deal once a settlement is negotiated.

I suggest you NEVER OFFER an agreed judgment during negotiations, rather wait to see if the creditor's attroney will require one. If one is required, ask if they will hold it and not FILE it for record unless & until there is a default on the payment terms. This is always negotiable.

Do not be surprised if you encounter these during your negotiations and ALWAYS feel free to contact me if you have any questions during your negotiation process. I am here to provide whatever guidance I am able for those that have invested in my commercial debt resolution Business Plan System.

Scott F. Soape