So they got a judgment… I guess you really owe the debt now!

So you have an outstanding balance with an unsecured creditor…  a credit card, line of credit, or any other personally guaranteed debt. You have fallen on hard times, don’t have the funds to make your monthly payments, and the calls from your creditors are becoming more and more persistent and becoming an annoyance to you and your family.

If your trying to settle these cards for low percentage lump sums payoffs, you are likely going to come up against a creditor who files suit against you, and eventually gets a judgment. Judgments sound scary, and they can be for many people. But if you are truly financially insolvent (your liabilities outweigh your assets), your home is underwater on its mortgage (if you live in America right now it most likely is), and your monthly cash flow is just enough to cover your expenses, a judgment is not something you need to fear, as a creditors judgment remedies will prove fruitless. In other words you are “judgment proof”.

Instead of fearing the judgment, realize that you are now positioned to push for a low settlement. The creditors have exhausted their collection tactics, and the fact that you are “judgment proof” means that there is not much more they can do. Instead of incurring further legal bills trying to garnish your wages for the next 20 years, most creditors will realize that it makes sense for them to accept a low settlement offer on your outstanding balance.

The fact of the matter is that you cannot get blood from a stone, and fortunately we live in a day and age where creditors cannot send you to prison. A judgment from a creditor is a civil matter, not criminal. If you have a negative net worth, no equity in your home, and no accounts with significant balances to be levied… a judgment is not something to fear… it just means that you really owe the debt now!