Should Judgment Creditors Be Willing to Negotiate With Debtors?

The winning parties in money judgment cases are known as judgment creditors. The losers are known as judgment debtors. They have an interesting relationship that ties them together for as long as it takes to settle the debt between them. It could be years in some cases, which begs the question of whether judgment creditors should be willing to negotiate with debtors.

I have spoken to creditors who refused to negotiate under any circumstances. For them, it was the principle of the matter. They went to court and won. They established the fact that the other party wronged them. So whatever it might take, they were going to hold out until they got paid in full.

I understand the sentiment. I don’t even disagree, in principle. But I am also pragmatic. Holding out can cause more trouble than it is worth. Sometimes, negotiating is a better way to go. Allow me to offer three examples to illustrate.

1. Negotiating Interrogatories

Interrogatories are a post-trial discovery tool utilized by judgment creditors to get information from their debtors. Typically, the creditor’s attorney will furnish written questions to the debtor’s attorney. It is understood that the debtor will answer the questions truthfully and return the documents to the creditor’s attorney in a timely manner.

Failure to do so could encourage the creditor to seek a court hearing for which the debtor is compelled to attend. A failure to attend could lead to a bench warrant for the debtor’s arrest. The debtor would be forcibly brought into court to answer questions.

Extracting information by force is one way to do things. But it antagonizes a debtor and increases the chances that he will not cooperate thereafter. So if a debtor fails to return interrogatories on time, negotiating a solution might be better than antagonizing.

2. Negotiating a Payment Plan

Maybe interrogatories go off without a hitch. The debtor offers all the information truthfully and quickly. But at the end of the day, he really does not have the financial resources to pay in full. The creditor can aggressively go after his property or garnish wages. But he could also negotiate a payment plan.

A payment plan eliminates the need for any further collection efforts. It also sets the table for the creditor getting every penny owed, plus interest. On the other hand, going after property and income could encourage the debtor to resist. If he resists long enough, a creditor might not get anything at all.

3. Negotiating a Settlement

Finally, consider negotiating a settlement. Maybe interrogatories went well but a payment plan doesn’t seem viable for whatever reason. The creditor still doesn’t have to go after the debtor’s property and income. He could choose to negotiate a settlement.

Utah-based Judgment Collectors explains that a settlement is an agreement designed to put the case to bed. Typically, a creditor agrees to accept less than what is due in exchange for immediate payment. The debtor makes a lump-sum payment and goes on his way. Both parties sacrifice a little to gain a lot. On the other hand, there is always the risk of not getting paid a dime even after putting time and effort into more aggressive judgment collection efforts.

There are very good reasons for going after judgment debtors aggressively. There are times when writs of execution and garnishment orders are the only appropriate means of getting paid. But as I see it, negotiations should never be completely off the table. Negotiating with a debtor can lead to a more amicable resolution in a shorter amount of time.