Vacating a judgment can help you collect your judgment? How can that
be? It may not sound logical, but stay with me and I’ll explain
how, when, and why.
First, let me explain what vacating a judgment means.
Basically to vacate a judgment means that the court has made void
or annulled its previous decision or order. In other words, the
effectiveness of the previous judgment has been totally undone.
If you want a better definition, look in a legal dictionary.
Normally one of the parties to a lawsuit files a
motion with the court for the judgment to be vacated. Though this
motion is more often made by the judgment debtor, there are times
when the judgment creditor will file a motion to vacate a final
judgment of the court.
The rules that allow for a court to entertain a
motion to vacate a judgment vary from state to state and from state
to federal courts. Even within a particular state there are sometimes
differences in the circumstances that allow a judge to vacate a
judgment. You’ll need to check the court rules for the jurisdiction
that applies to your judgment.
Even where rules and statutes allow for vacating
a judgment, courts are typically slow and deliberate about vacating
a final judgment. Final normally means FINAL. However, as the rules
allow, under the right circumstances a judge can vacate an order.
In any case, there is usually a time limit within which a court
may consider a motion to vacate. The deadline may be very soon after
the final judgment. Some courts may have a 30 or 60 day limit to
work with. Others may be 2 or 3 years. It all depends on the jurisdiction,
and may even depend on the reason stated in the Motion to Vacate.
As you know, all judgment debtors aren’t necessarily
alike. Some are just plain deadbeats and don’t care. You’ll
find that others are just the opposite. They care about the judgment
that was rendered against them. Some care enough to take immediate
action to pay the judgment debt as soon as the court awards the
money judgment. This group will more likely be concerned about how
the court judgment will affect their credit.
One of the circumstances which allows for vacating
a judgment in many jurisdictions is the fact that the judgment has
been satisfied. That certainly does not mean that most satisfied
money judgments are vacated. Most are not vacated. Most judgment
debtors probably don’t even know that there is such a thing
as a motion to vacate a judgment.
If you are trying to collect a judgment from a judgment
debtor who is seriously concerned about the effect of a judgment
on his credit score, you may be in a better position to collect
your judgment money. With this type of debtor, you may entice him
to pay you the money owed on the judgment debt.
If a judgment debtor has a judgment which appears
on his credit report, it will lower his credit score. It might be
the difference between getting approved or not for a new home mortgage
or other loan that he is seeking. Having a judgment on his credit
report might influence a prospective employer to not hire the judgment
debtor. There are numerous ways that having a judgment show up on
a credit report can cause trouble for someone.
Suppose a judgment debtor pays the judgment debt
completely. Later when the credit reporting agency shows that the
judgment has been satisfied, guess what happens to his credit score.
Surprisingly his credit score will still take the same negative
hit with a satisfied judgment being reported. Whether a judgment
is reported as satisfied or not, the credit score will suffer. And
even a satisfied judgment will still show up on his credit report
for years to come.
If your judgment debtor is mainly concerned about
the effect of the judgment on his credit score, he may not be motivated
enough to pay the money judgment, if he is aware that paying the
judgment won’t improve his credit score immediately. Since
a satisfied judgment is detrimental to his credit score just like
a judgment that remains unsatisfied. However, if the judgment gets
vacated, that means it is just like it never existed. It is then
possible to petition the credit reporting agencies to remove the
mention of the judgment from their credit report.
This is where you can supply some new motivation
to get him to go ahead and pay the judgment. You can explain that
as soon as he pays you what he owes, a motion to vacate the judgment
can be filed with the court. This Assumes that you know that the
statute of limitations has not expired for filing a Motion to Vacate.
This also assumes you have checked to make sure that satisfying
a judgment debt is an acceptable reason for your court to vacate
Having the judgment vacated may be the only way
the judgment debtor can get the judgment off of his credit report.
This judgment collection strategy will work on those
debtors who are motivated to keep a good credit score. Due to the
statute of limitations on vacating judgments, you have an additional
motivation for the debtor to take care of things sooner rather than
What if you are negotiating a post judgment settlement
agreement with your debtor? If you engage in negotiating a judgment
settlement with your adversary, you can still agree to file a satisfaction
of judgment with the court, even if you settle for less money than
what the judgment awarded. If a post judgment settlement agreement
leads to a satisfaction of judgment, a motion to vacate won’t
be precluded just because the settlement agreement was for less
than the original judgment award. Actually, a willingness to work
with the debtor on any basis that leads to the possibility of getting
the judgment vacated, should make it easier for you to negotiate
more favorable settlement terms for yourself.
Though it may be acceptable for you as the judgment
creditor to file the motion to vacate, I would hesitate to do so.
I would let the debtor file his own motion to vacate. If his motion
should by any chance result in any attorney fees or court costs,
I would much rather let him be the one who bears that cost. Why
pay a judgment attorney to file the motion? Let the debtor hire
his own attorney if he thinks one is needed for getting the judgment
This judgment collection strategy may be just the
ticket you need to get your judgment money. If you listen to your
judgment debtor, he may tell you exactly what you need to know.
He may indeed make it plain to you that getting the judgment vacated
and subsequently removed from his credit report is the magic that
will get you your money! CHA-CHING