DEFINITION of 'Satisfaction And Release'

Formal paperwork stating that a consumer has paid the full amount owed under a court judgment. A satisfaction and release proves that you’ve paid your debt and prevents creditors from trying to recover more money from you. This document states the name of the creditor that has been paid, the date the full or final payment was received, and the name of the debtor who has fulfilled its obligation to the creditor.

BREAKING DOWN 'Satisfaction And Release'

If a creditor sues you because you haven’t paid your bill and the creditor wins the lawsuit, the judge decides how much you have to pay the creditor. Once you’ve met your obligations under the judgment — that is, once you’ve repaid the creditor what the judge determined you had to pay — the creditor should sign a satisfaction and release. This document, like the original judgment, becomes part of the public court record and should be reported to the credit bureaus so that your credit report will indicate that you’ve met your obligations under the judgment. A judgment is always bad for your credit and will stay on your credit report for seven years, but a paid judgment will hurt your score less than an unpaid one.

If you find yourself delinquent on a debt, you  need to keep excellent records of your interactions with creditors, debt collectors and courts. One problem that can arise is that when your debt becomes so far past due that the original creditor doesn’t believe it can collect, it will sell your debt to a debt collector. If the debt collector can’t collect, your debt may be resold to another creditor, and this process can happen repeatedly. The details about how much you owe, to whom and from when can get lost during this process, resulting in debt collectors pursuing you for debts you’ve already repaid, debts that are past the statute of limitations, or debts you never owed in the first place because they really belong to someone else with a similar name or Social Security number.

So if you pay off a debt and receive a satisfaction and release, keep the document in your files forever and make backup physical and electronic copies. This way, if someone tries to collect the same debt from you in the future, you can prove you’ve already paid it. Further, if the old judgment were to reappear on your credit report after seven years, you could use the satisfaction and release to prove to the credit bureau that you paid your debt and the judgment should be removed from your credit report. 

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