Can I settle a debt with my judgment creditor without going bankrupt? (satisfaction of judgment)

Yes.  And although I hate saying it, if there is a way you can settle your debts and stay out of bankruptcy, then you should take it.  Your credit will be better in the long run.

I had a potential client who had $1,500 cash in hand ready to file a chapter 7 case.  I was more than ready to take his money.  Then he had an idea:  he would call his largest creditor and see if that creditor would take that same $1,500 to settle out a much large judgment claim.  

Fortunately for the client, the creditor accepted the offer.  Because of this settlement, my potential client didn’t need to file bankruptcy.

Now the creditor had sued my client and already had a judgment.  Not only was this hurting my client’s credit, but he was worried that this creditor would take the settlement money and then still proceed to garnishment.  In order to protect my client, he drafted up a Judgment Settlement Agreement (copied from a web search), and brought it to my office along with a cashier’s check to settle the debt.

Because there was a judgment entered, my client also needed a Satisfaction of Small Claims Judgment (found here: ).

Both parties signed the agreement, the plaintiff signed the Satisfaction of Judgment, everything was notarized, and we filed the Satisfaction with the court.

At that point, the judgment was satisfied, the creditor could no longer collect, and my client avoided bankruptcy.