How do I negotiate with creditor when they have a judgment?

[spano41]

So my husband has a ton of student loan debt all incurred before we were married. He has 200,000 in federal loans, 25,000 in private and a 20,000 judgment for a bar study loan which doesn't count as a student loan (yikes! I know!!). We are currently paying off the federal and private student loans but haven't touched the 20,000 judgment. He was underemployed for a long time making around $12,000/yr so he just couldn't pay. He recently got a better job (yay!) but now I'm worried they are going to try to garnish his wages. My question is, should we try to negotiate to pay off the judgment at a reduced rate before he files taxes in April and they find out he has a job, or should we just wait and hope that the SOL passes/they never come after the money. The judgment was issued in 2008 and we live in WA state. The money we would use to pay is my money from an inheritance that they will not be able to take unless we give it to them. He doesn't have anything they can take other than wage garnishment but as far as they know he only makes $12,000/yr and in WA that is below the limit so they can't garnish. I just don't want to stir the pot and have them re-examine his file and figure out he now has a better paying job. Any advice? If you think we should negotiate, what is a reasonable offer to make?

[breeze]

Moving this so it will get more attention.

[CG in TX]

Negotiating with a judgment creditor should always be done humbly; they hold all of the cards. Generally, they are going to want full financial information before accepting any offer, and they will probably verify the information you give them. The SOL for a judgment in WA is 10 years, and I believe it can be renewed for another 10. You might want to do some digging in the court records for other judgments from that lender (and by the attorney who handled it) to see if they generally renew or get aggressive about execution as the judgment approaches SOL. This will give you a better idea of the risks.

[legaleagle2012]

http://apps.leg.wa.gov/rcw/default.aspx?Cite=6

 

You should read the rules so you know where you stand. They have the option of conducting a debtor's exam at any time to find out wages, etc. I would be careful co-mingling any funds, WA is a community property state. They may take your money if it's in a joint account, then you'll have to fight in court to get it back.

[spano41]

Yes, I have been very careful about mingling funds, I got legal council before we got married to make sure everything was protected. He was pretty much judgement proof until he got this job. A "debtor's exam" (I didn't know it was called that) is exactly what I don't want to happen. Good to know that they will probably want that financial information if we contact them. I obviously can't lie to them but if it takes them a long time to figure out he has a new job then so be it. So I guess it is probably in our best interest to just not stir the pot. It's a great idea to see how aggressive they are about renewing the order but at this point I'm just assuming they will. I would really just like this to all be cleared up and not have it drag on for 15 more years but we/he is probably going to be in debt for at least 15 years with the other loans anyway and with this judgement he really can't buy a house or anything so credit score is kind of irrelevant. I guess the good/bad news is that if they do start to garnish his wages, he will have the loan paid off in 2-3 years....we just probably won't be able to pay rent It is kind of sad that if they do garnish, it would be in our family's best interst for him to just quit working. In some cases, education is definitely not worth the investment!

[legaleagle2012]

Common problem today, rack up 200 grand in debt to get no job. Keep an eye on HR 532, if it ever passes student loans will be dis chargeable in BK. They are now, to some extent, but very difficult to get approved. The debtor's exam is a subpoena to appear in court and testify about employment, finances, assets, etc. If you ever get one, go to court. failure to appear is contempt of court and they can arrest you. Don't bring ANYTHING of value, they can empty your wallet and take anything you have that looks good. Really.