What is Stipulated Judgment
A Stipulated Judgment is a court order requiring one party to pay another party a specific amount of money, usually on a payment plan.
BREAKING DOWN Stipulated Judgment
A Stipulated Judgment is a court order issued to settle a debt, which requires that a debtor pay their creditor a specified amount according to an agreed schedule. This is sometimes also known as a consent judgment.
A stipulated judgment is arranged in the courts by a debtor who has limited means of repaying debt, often established as a means for a debtor to prevent wage garnishment. In most cases, a stipulated judgment is sought by a debtor as a last-ditch attempt to settle a debt with a creditor that has sued for repayment of monies owed, as well as any associated fees and interest.
If a creditor can secure a civil judgment against a debtor, the court can order payment of debt through a variety of means, including voluntary payments and garnishment of the debtor’s paychecks. Debtors who face a court judgment regarding delinquent debt may petition the court for a stipulated judgment in order to halt garnishment and other collection proceedings.
A debtor who agrees to a stipulated judgment establishes a legally-binding agreement with their creditor to pay a specified amount of money on a specified timeline. In many cases, debtors find a stipulated judgment advantageous in agreeing to settle a debt, as creditors are sometimes willing to negotiate for a reduced amount, sometimes by forgiving late fees, interest charges, and even principle balance in order to settle debt.
Delinquent debtors who agree to stipulated judgements must then meet all repayment obligations on the agreed timeline with the debtor, or run the risk of forfeiting all benefits, including fee reductions and the threat of wage garnishment.
At the time a stipulated judgment is issued, it will address the terms and conditions in case either party does not uphold their agreement. In most cases, when a debtor fails to adhere to the payment plan agreed upon in a stipulated judgment, the debtor will then be liable for the entirety of the original debt including interest and fees, minus monies already paid back.
Bankruptcy and Stipulated Judgments
While laws vary from case to case and state to state, stipulated judgments may sometimes be dischargeable in bankruptcy.
Many kinds of debt cannot be forgiven in bankruptcy, including student loans, tax debt, child support, alimony and more. Other types of debt may be forgiven in bankruptcy at the discretion of the court.
A debtor with a stipulated judgment against them will need to consult an attorney familiar with the federal and state laws governing bankruptcy and the discharge of debt.