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Whenever a debtor pays off or settles a judgment, the creditor must, or at least should, file a proof of satisfaction at the court where the judgment was filed. Some states have strict time limits on when you must file a satisfaction of judgment - for example, 2 weeks or 30 days - while other states do not have any time limits. An advantage of such a time limit is, that the debtor should quickly be relieved of having a judgment debt hanging over them. A disadvantage of this time limit is that checks (even cashiers checks) can be faked or bounce, even months later in some cases. Also, a debtor can file for bankruptcy protection, and if they file it within 90 days of paying off a judgment debt, the creditor might have to give back the money to the bankruptcy court trustee. A satisfaction of judgment is a (correctly filled out and usually notarized) court form that is filed and endorsed (stamped) by the court. Only a satisfaction of judgment can eliminate a judgment debt. Until a judgment is satisfied correctly, the judgment debt stands. Unsatisfied judgments can show up on credit reports, subjecting one to surprise levies and garnishments, and even a sheriff taking one's property or car. A judgment debtor can pay off a judgment by paying the court directly, paying the creditor (which could be the original judgment creditor, or an assignee of record), or paying the sheriff, in the case of a seizure (levy) of the debtor's property. Sometimes a judgment debt is paid in full, other times it is settled for less than what is legally owed. The creditor always has a right to settle for less than what is legally owned, and often this makes sense. Sometimes judgments are recovered for less than what is legally owed, even when the creditor has the upper hand. For example, in some places it costs more than $200 to levy a bank account. In the case of a judgment debt of $2,000, if the sheriff levies the full $2,000, the $200 you spent to do this is usually not collected. That $200 is legally part of the judgment debtor's debt, but collecting that $200 often requires a separate levy action you must pay for. While this problem can sometimes be solved with planning, there is usually an unpaid amount owed after a levy. Often it is better to "eat" the last unpaid small percentage of the debt owed, and simply satisfy the judgment. Sometimes the debtor needs to remind the creditor to file the satisfaction of judgment. The debtor can check with the court to make sure the judgment has been satisfied. If the creditor, after being paid in full, refuses to satisfy the judgment, the debtor can sue them. The debtor should not pay off a judgment with cash, unless they are paying the court or the sheriff. A debtor should keep together copies of all checks or money orders used to pay off a judgment, and a copy of both the judgment and the satisfaction. Note that the creditor is only required to file a satisfaction of judgment. If a certified copy is needed to file at a county recorder, it is usually the debtor's responsibility. ------ Mark D. Shapiro - Judgment Broker, http://www.JudgmentBuy.com - where Judgments go to get enforced.
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