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How to Legally Settle Debt After Wage Garnishment

Written by Hannah Locklear
Last updated on May 1, 2026

Summary: You can still negotiate and settle debt even after wage garnishment begins. Use leverage points like job loss, offer lump sums, negotiate payment plans, and always get agreements in writing. Solo can help you respond to debt lawsuits and SoloSettle connects you directly with collectors to negotiate favorable settlements.


Getting that first paycheck with a big chunk missing due to wage garnishment can feel like game over, but it's not. You still have options, and you can still negotiate your way out of this situation.

Attorney Greg Anjewierden from Debt Brief recently joined The Debt Hotline to explain exactly how to settle debt after wage garnishment starts. His advice? Don't panic, and definitely don't assume you've lost all control.

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You can settle debt at any stage of the process

The most important thing to understand about wage garnishment is that settlement remains an option throughout the entire debt collection process, even after they're taking money directly from your paycheck.

"I think most people think about this as, 'Oh, I get contacted by a debt collector, or I get sued by a debt collector and then I reach out and try to put it on a payment plan,'" Greg explains. "But at any point during that process, you can settle."

If you're facing wage garnishment, it means you've already been taken to court and lost. There's a judgment against you. But that doesn't mean negotiation is off the table.

Respond to debt collection lawsuits fast with Solo.

Understanding your leverage (or lack thereof)

When creditors are garnishing your wages, they have significant leverage. They know exactly where you work, they're already collecting the maximum amount allowed by law (typically 25% of your take-home pay), and they have a guaranteed income stream from you.

But that doesn't mean you're powerless. You just need to find ways to make settlement more attractive than continued garnishment.

Greg suggests several strategies:

  • Offer a larger monthly payment: If they're taking 25% of your pay, offer to pay more per month in exchange for a shorter payment period or reduced total amount.
  • Propose a lump sum: Can you come up with a significant amount upfront? Many collectors will accept a guaranteed lump sum rather than chase you around for years.
  • Use life changes as leverage: Lost your job? That's actually an opportunity to negotiate, since they can't garnish wages you're not earning.
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The hidden cost of ignoring settlement

Here's something most people don't realize: settling for the full amount you owe can actually be a great deal—if you stop the interest from continuing to accrue.

Greg emphasizes this point: "Most debt settlements are that way. There's not a negotiation for what the interest is going to be after—it's going to be like we're going to settle at this amount of money total."

Solo's data shows that people who lose their cases and go into garnishment typically pay 70% extra on top of what they're being sued for, once you factor in post-judgment interest, court costs, and legal fees.

Let's say you're being sued for $1,000. If you recognize the debt and want to settle, you shouldn't just think about saving money off that $1,000. You should calculate your savings against the $1,700 you'd likely pay if the case goes to judgment with interest and fees.

Settle your debt for less with SoloSettle.

Real-world scenarios and solutions

The unemployed borrower

Take Saldon from Maryland, who wrote in during the podcast. Portfolio Recovery had been garnishing his wages for three years, but he lost his job. Greg's advice? Use this as leverage.

"Losing your job is actually kind of the leverage you need in a wage garnishment negotiation," he explains. "Now Portfolio Recovery can't garnish from the place you were working before. They'd have to track you down and find your new job, which takes time."

This creates an opportunity to reach out and say: "I'm not currently working, so you're not going to be able to garnish wages from me. Here's what I can offer you right now."

The double-payer

Tina from Oklahoma was both having her wages garnished and making additional voluntary payments. While this is allowed, Greg recommends using those extra payments as negotiation leverage.

"I probably would use this to my advantage and go to them and say, 'Look, you can only get 25% from me in garnishment. I'm willing to pay you more, but you've got to give me something in return,'" he suggests.

At minimum, negotiate to stop interest accrual in exchange for those additional payments.

The Social Security recipient

Patricia asked about $10,000 in debt while living strictly on Social Security. Since Social Security income is generally protected from garnishment, she's essentially "judgment proof" regarding her income.

This creates significant leverage for settlement negotiations. As Greg puts it: "You can go to them and say, 'This is the situation I'm in. You're not getting any money out of me, but here, I can throw you a little bit of money.'"

Nicole from New York asked whether she should hire a lawyer after receiving a wage garnishment notice from the sheriff's office. Greg's honest answer reflects the economic reality many people face:

"As a lawyer myself, I'm always going to tell you that it's better to have a lawyer than to not have a lawyer. The problem in situations like wage garnishment is that a lot of times you will pay more to the lawyer than the amount that they're trying to garnish."

The key question is: Do you recognize and owe this debt? If it's identity theft or a debt you don't owe, hiring a lawyer makes sense. But if you legitimately owe the money, it might be more economical to focus on settling the debt quickly.

Post-judgment options still exist

Even after a judgment, you have some legal options:

Motion to Set Aside the Judgment: If you missed your court date due to a legitimate reason (never received proper notice, medical emergency, etc.), you can ask the court to set aside the default judgment and restart the case.

Continue Settlement Negotiations: Even during appeals or other legal proceedings, settlement remains an option. In fact, Greg notes that cases often settle during appeals because both sides face uncertainty about the outcome.

Let's consider an example

Example: Bobby was being garnished by Midland Funding for a $5,000 credit card debt. They were taking $200 per month from his paycheck, and with 10% annual post-judgment interest, the debt was actually growing faster than the garnishment payments could reduce it.

Bobby used SoloSettle to offer a lump sum of $2,500 to resolve the debt completely. After some negotiation, Midland accepted $3,000 with no further interest accrual. Bobby borrowed money from family to make the payment, avoiding years of garnishment and thousands in additional interest charges.

Who do you actually settle with?

This can be confusing, but here's how it works: You'll negotiate with the lawyer representing the debt collector, but your settlement agreement will be with the debt collector itself (like Portfolio Recovery or Midland Funding), not the original creditor.

Just make sure the debt collector actually has the legal right to collect on your debt. You don't want to settle with a collector only to get sued again by the original creditor.

The bottom line

Wage garnishment doesn't mean you've lost all control over your financial situation. You can still negotiate, settle, and resolve your debt, often for significantly less than you'd pay through continued garnishment.

The key is understanding your leverage points and acting strategically. Whether you're unemployed, retired, or simply want to stop the bleeding of accumulating interest, there are paths forward.

Remember: Just because garnishment started doesn't mean you've lost all your rights. You still have options, and taking action now can save you thousands of dollars and years of financial stress.

Need help navigating debt settlement or responding to a lawsuit? Solo provides tools to help you file court documents properly and negotiate directly with collectors without uncomfortable phone calls. Visit Solo to explore your options and take control of your debt situation today.

Transcript

George (00:02):

This is George with Solo. I am one of the founders and we help people resolve debt. We're here with Greg. Greg, can you go ahead and tell us a little bit about yourself?

Greg (00:47):

Yeah. I'm Greg Angewerden. I'm an attorney. I'm licensed in Utah. I also have a company called Debt Brief that helps find resources for people that have been sued by debt collectors, resources like Solo.

George (01:00):

Nice. Fantastic. Thanks for coming on the hotline today.

Greg (01:03):

Sure. Happy to be here.

George (01:05):

Today's special topic is how to legally settle debt after a wage garnishment starts. So Greg, let's go ahead and start there. How do you legally settle a debt after wage garnishment begins?

Greg (01:20):

Alright, so I think the thing that's important to know about settling a debt after a wage garnishment starts is that you can actually settle a debt at any time during the process. So I think most people think about this as, oh, I get contacted by a debt collector, or I get sued by a debt collector and then I reach out and try and put it on a payment plan or whatever. But at any point during that process, you can settle. So if there's a wage garnishment against you, you may not know it, but it means that you have been taken to court and you've lost and there's already a judgment against you. If you're at the wage garnishment stage, that court process is already essentially through even though they're taking the money out, you can still settle at that point. I think the thing is you want to try and settle at points where you have more leverage in the negotiation.

Once they're garnishing wages, maybe some of that leverage is gone, but not completely. So you can still reach out to the debt collector and settle with them or offer some kind of a payment plan or a lump sum payment. I think you've just got to remember that the leverage that they have is they've already got a judgment, they already know where you work and they're taking out probably the maximum that they're allowed by law. In most cases, that's about 25% of your take home pay. So you've got to find a way to entice them to take your deal. So I think that's the key thing to note is that yes, you can settle a debt pretty much the sky's the limit as for what that arrangement could be as long as both sides agree to it. But you've got to remember that their leverages, they're already getting some money from you, so you've got to make it enticing to them in some way.

George (03:04):

So you're going to have to make a pretty high offer probably to get off the garnishment

Greg (03:10):

And it might be something like they're allowed in most cases to take around 25% of your take home pay. So you've got to say, okay, can I give them more per month than that? But maybe less total, or maybe it's can you come up with a lump sum that's a lot more than they're going to get in the next couple of months, but maybe less overall. So if you owe $5,000, they could garnish a little bit every month until they hit the $5,000. Or can you say, look, instead of taking a couple hundred bucks every month forever, how long it takes until they hit that 5,000? Maybe can you offer them 2,500 right now? And in a lot of cases they might take that guaranteed upfront money rather than chase you around and try and if you quit your job and go somewhere else or they risk not getting some of that money and it takes a long time. So a lot of times they might take a bigger lump sum payment upfront.

George (04:10):

Yeah, post-judgment statutory interest is 10% on average, if someone's being garnished at 25% of the take home pay certainly conceivable that someone's being garnished for less than the monthly interest that's accrued. You ever seen that situation in the wild, Greg?

Greg (04:28):

Sure. Yeah, I mean it happens. I will say that one of the biggest benefits of settling a case is a lot of times you can get rid of the continuing accrued interest. So if you owe let's say $2,500, they're garnishing the wages. Even if you can reach a deal with them that's like, look, I'll pay a little bit more than you're garnishing. We'll put this on a payment plan and then as part of your deal, you're hitting a hard stop point. It's like I'll pay you $2,500 over six months and then if you get that deal down in writing, that interest isn't continuing to accrue. So a lot of times even settling for the full amount that they're asking for is actually going to be financially advantageous to you because just the interest alone could be a lot of money. So if you just get 'em to settle at a set amount, that can be a really good option.

George (05:24):

Really an incredible term that people can get in settlement is that the interest has stayed for sure,

Greg (05:31):

And I would actually say that most debt settlements are that way, right? I've negotiated so many of these and in most cases there's not a negotiation for what's it going to be after the interest is going to accrue, it's going to be like we're going to settle at this amount of money total. And so then you've stopped if the huge incentives to settle and get that resolved rather than going into garnishment. What we've seen, we run the numbers, so folks, if you're listening, we do the calculation for you on SoloSettle. We show you how much you'll pay or likely to pay if you don't settle a conservative estimate that we've seen when we model out the math and the interest is that people pay 70% extra on top of what they're being sued for if they lose and go into garnishment.

Greg (06:25):

And I think that's an important point because I think most people think, oh, I'm trying to settle, how much less can I get it for? And I don't think people realize that settling for the full amount that they're asking for can really be a good result as long as that interest doesn't continue,

George (06:42):

You really should be doing the math of what you're saving from 170% of the amount you're being sued for. So if you're being sued for a thousand dollars and you agree that you owe the debt, you recognize the debt, you should do the savings out of $1,700. So if you end up settling for like $800 or even 500, you should be doing the savings as 1700 minus 500 total savings of 1200. Yes, that's a great tip there folks. Definitely something to think about. Huge incentive to get these cases settled because of that. We have a question from Saldon in Maryland. Saldon says, I have a credit card judgment debt against me from portfolio for the past three years. They've been garnishing my wages for a while and I lost my job. So I'm not working right now, but I will need advice on how to settle this for less. How should I go about it?

Greg (07:43):

I actually think as crazy as it might sound, losing your job is actually kind of the leverage you need in a wage garnishment negotiation, right? Because when they're garnishing your wages, they know they're getting a guaranteed amount every time that you get a paycheck and then you lose your job and now the portfolio can't garnish from the place you were working before right now. So you could go get another job and they could track you down and find you. It's going to take them probably a little bit of time to do that, but the fact that you're not working now is the opportunity to reach out and say, look, I got let go or laid off or whatever from that previous job. I'm not currently working so you're not going to be able to garnish wages from me, so here's what I can offer you right now. And it might be the thing that they say, well look, we'd rather take whatever little money he can offer rather than continue to try and chase him around and who knows how long he could be out of work or whatever. So I actually think when you're unemployed is oftentimes a good time to reach out and try and settle because it gives you that little bit of leverage because they're not currently getting money from you.

George (08:51):

For sure. And I think something to keep in mind here s don is that you do have a judgment against you still. So that is probably pretty much nearly infinitely renewable. So that's something to keep in mind, but still, even that said, the garnishment has dried up. There's no real path for them to garnish anything at this point. So you do have added leverage to get this thing settled.

Greg (09:19):

And I agree with your point of like, Hey, this judgment can last a long time. Sometimes people think like, oh, well I'll just let this go and I mean judgments will last. I mean it depends on the state, right? You're somewhere in five, 10 years or more and then they can be renewed. I mean just who knows what kind of situation you're going to be in 15 years and you think you've forgotten all about this judgment and this debt because they haven't garnished your wages in so long and all of a sudden they just start garnishing again. So I don't think it's always a good idea to just let it sit there and do nothing. If they're not collecting it might be a good time to negotiate a settlement

George (09:58):

For sure. We have a question from Tina in Oklahoma. I am having my wages garnished and I have been paying them monthly payments for the last two years and they double dip. I'm not exactly sure what she means by double dip. Do you have an idea here, Greg?

Greg (10:19):

The only thing I can think of is that perhaps they're garnishing her wages and then she's making payments as well in addition to the garnished wages. I don't know if that's what she's talking about, but that's what it sounds like to me. And certainly you could do that, right? And it's all going to go towards that final judgment amount. So I mean, theoretically they can only garnish your wages up to a certain limit and you pay more. That's all going to go to pay off that judgment eventually. I don't know that I would necessarily make payments on it unless I get a deal with them.

George (10:55):

Oh yeah, yeah. Reading her statement again, she says I'm having my wages garnished and I'm paying them monthly. Yeah, so she's doing both is that?

Greg (11:06):

Oh, sure. Well, it's allowed because they can only take so much. So they're garnishing the maximum probably that they're allowed by law, she's making voluntary payments in addition to that, so they can't force her to make those additional payments, but she can voluntarily do that. And the idea behind that would be, look, you've still got to pay off this total judgment and there's probably post-judgment interest accruing. So yeah, you can make more payments to get rid of that judgment faster. If it was me, I don't think I would make those voluntary payments unless I also get a settlement deal. So even if that is like we talked about the full amount but stops the interest, which you can probably get. So yes, it's allowed. I probably would use to my advantage though and go to them and say, look, you can only get the 25% from me in garnishment. I'm willing to pay you more, but you've got to give me something in return if you want to get more back and I negotiate a deal from there to at least get that interest state.

George (12:12):

You're making all these additional payments, I mean, good job making all the payments, Tina, it sounds like you have sincere intent to get this thing paid off and get back on the right track. So hopefully you can get out of this situation here pretty quickly. You got another question here from Nicole and in New York, she says, I got a letter from the sheriff's office for a wage garnishment. Should I get a lawyer?

Greg (12:39):

I mean, look, as a lawyer myself, I'm always going to tell you that it's better to have a lawyer than to not have a lawyer. I think the problem in situations like wage garnishment are a lot of times you will pay more to the lawyer than the amount that they're trying to garnish or it'll cost you more than the total amount that they're asking for, and that doesn't always make financial sense. So yeah, if you can afford a lawyer, you should always have a lawyer. You're always going to be better off with a lawyer, but I think in a lot of these debt kind of cases, it just doesn't make financial sense. You might be better off just taking that money and using it to pay off the debt, but I think that's where a tool like SoloSettle is going to come in real handy because it's going to be certainly cheaper than what a full service attorney is going to cost, but you can get close to the same results with it. Right,

George (13:41):

And a crucial question here is do you recognize the debt, Nicole? Do you owe the debt? If you don't owe the debt and you just are getting garnished randomly, then certainly makes sense to get a lawyer to help you with your identity theft situation. It's probably a case of identity theft that would make sense to pay a lawyer to wrap that up. But on the other hand, if you owe the debt, it might just be more economical for you to just try to pay this thing off quickly. Even if you're inactive weighted garnishment, you can go over to SoloSettle and make an offer to the collector to get the case wrapped up, just go on solosuit.com, right click settle adept, and just get started. Just go through this process. You'll make a free account and you can just come in, you give us some basic information on your lawsuit, then you can see some options that are likely to work out for you and the collector for settlement. Select one of those and start making payments to the collector. This one looks pretty interesting here from Jose. Jose says, I'm currently appealing a limited civil case. If it doesn't turn out in my favor, would settlement still be an option?

Greg (15:02):

So like I said before, settlement's always an option at any stage. So you're currently appealing. You can settle during the appeals process, you can wait for the appeals process to play out and depending on it goes, you can settle. Then you could appeal and the whole thing is done. The whole litigation lawsuit process is over and you've lost. You can still settle that debt. Now I think the key thing to remember though is when you're negotiating a debt, you want to find points of leverage. So waiting until an appeal is over may not give you the most leverage because you lose that appeal. You really don't have a lot of leverage at that point. So appealing that case and pushing it all the way to the brink of getting an appellate decision is usually a good time to negotiate a settlement because the other side could say, look, while we feel pretty good about our position, there's always risk we can lose. And so parties often settle at those points. So yes, you can. Yes, settlement is still an option after you appeal, but you may want to think about do you have more leverage now than you would later?

George (16:12):

That's for sure. Do you settle with the lawyer suing you, the debt collector or the original creditor?

Greg (16:21):

Okay, so this is a little bit complicated of an answer, but the settlement itself will be with the debt collector, but you're going to negotiate with the lawyer who represents the debt collector. So we talked about portfolio recovery earlier. Let's just walk through a hypothetical scenario where portfolio recovery is suing you. That's the party that you enter the settlement with, but the person you're negotiating with is the lawyer for Portfolio Recovery Associates. Now of course, if you use SoloSettle, you're not the one worrying about that so much because Solo is doing a lot of that negotiation for you, but ultimately the agreement that comes out of all that is going to be with portfolio. However, as far as the original creditor goes, that's why it's important if you get into this lawsuit process to make sure that they are validating or verifying your debt as part of that process because you want to make sure that the debt collector, if it's portfolio or whatever, actually has the rights to sue you. Because a nightmare scenario would be you get sued by a debt collector, you settle with them, but as it turns out, they didn't have the right to sue you, so now you get sued again by the original creditor. Now that's a really rare situation, but it could happen. That's why you want to verify that the debt collector has the right to sue you, and if they do, you're going to settle with the debt collector by negotiating with the lawyer.

George (17:49):

Nice, great. We got another question from Jason in Georgia. Jason says, hi, thanks for your time. I'm working to rebuild my credit after a stretch of financial hardship. My score is in the low five hundreds with a few charged off accounts and won active collections. I've started budgeting and opened a secured car, but I'm not sure whether to settle old debts or let them fall off. My goal is to buy a home in three to five years. What's the smartest way to repair my credit and improve financial stability without making things worse?

Greg (18:27):

I don't know if you have better answer than me on this one. I'm not a credit repair guy. I focus more on the litigation stuff. I know you have a lot of guests on the hotline here that deal with credit repair stuff, so I don't necessarily know what's going to repair your credit in the best way. What I can tell you is those debts can always be settled like we've already mentioned. So yes, you can still reach out if there are all debts and you know owe them, you can still settle them. The other thing is you can negotiate the credit reporting as part of your settlement, so you can ask them to remove it off the credit report or report it in a certain way that may be advantageous to you. A credit repair person's probably going to know what, that would be better than me. I know that I have negotiated those kinds of things for people before and different creditors and debt collectors handle those kinds of reports differently. Some will say, look, we're absolutely not going to negotiate the credit reporting aspect of this because their business relies on accurate credit reporting and they won't negotiate that kind of thing. Some will say, sure, we'll do that, and some will say, we'll do it, but it's going to cost you more.

So I'm probably not the best person to answer how to do that as far as your credit reporting goes, but you can negotiate. I do know you can negotiate all those things as part of yourself.

George (19:59):

Yeah, Jason happened to chime in on that. That is stuff that we help with at Solo now as well. And so you have a few things, right? You want to get your credit score up, you want to buy a home, you want to finish getting out of debt here. Sounds like you're on the right track, so that is fantastic. First step is to make sure you've resolved any lawsuits that you're dealing with. Sounds like you've done that. Next step is to settle any of these debts that you're dealing with. You have one in collections, a few charged off. You want to get those debts settled so you can go on to Solo, you can check your credit for free and see what accounts you have just to make sure you know what accounts you have that are in collections, and then you can make offers on all of those accounts to get those wrapped up.

Once you've done that, if your score will likely jump up a bit, once you get these accounts marked as settled on your credit report rather than delinquent or in collections, your score will probably jump up a little bit. At some point you'll be able to get new lines of credit to improve your credit score. You could probably get a secured line of credit or a secured credit card. You could also at some point just open up some new lines of credit for an ideal credit score. The bureaus do like to see quite a few lines of credit. We're talking 10 plus lines of credit. You don't necessarily need that many to get up to above a 700, but it is helpful. Number one thing is just to make sure you don't miss any payments. So once you get these other debts resolved, just make sure you're making your payments on time.

Make sure your payment history is good to go. That's the number one thing factoring into a high credit score and when you're preparing to buy a house, you just want to make sure that you're up above a 700 credit score. Ideally for the best terms on your mortgage, you can get qualified for mortgages and feel like below 700, but might be mortgages that you don't want, maybe loans that you don't actually want. So you want to get the credit score up and really you should be targeting like an 800 score over the long term. 7 50, 800 would be ideal and that'll be integrated position to get into a home. Let's see, we have another question here from Patricia. Patricia says that she retired due to health issues. She's living strictly on social security now, which she's saying the creditors cannot garnish. I have about $10,000 in debt, how do I get rid of the creditors?

Greg (22:39):

So she's got $10,000 of creditors coming after her and she's retired. Retired social security only retired. Okay, well, I mean in a lot of ways she, I mean, I don't know what kind of property she owns. Maybe she owns a home, but as far as her employment situation, she's kind of judgment proof. Like we talked about, judgments can last a long time. You just never know what kind of situation you end up in. I mean, I still think it's probably advantageous to try and negotiate some of these settlements away if for no other reason. We just talked about it can help with your credit reporting and these kinds of things. And I think the situation that she finds herself in is that this is again one of these points of leverage that she can use to try and negotiate. She owes $10,000. You're on Social security disability.

I mean you're not going to have $10,000 to come up with to pay these all off, but if you go to them and say, this is the situation I'm in, you can go ahead and do your own research and verify this, but you're not getting any money out of me, but here I can throw you a little bit of money. You may have an opportunity to settle those for not a lot of money. Maybe they don't come down to a number that you can afford and then maybe you let it sit for a while and then they realize six months from now that they really aren't going to get money out of you and you try and negotiate it again and you just kind of go through that process, I think,

George (24:07):

Right? Yeah, Patricia is certainly something to consider, right? If you have property, maybe it makes sense to downsize, sell the home, pay off this debt, put a bit of money into the bank into an emergency stash and then move on from there. That could also be a great way to get rid of the creditors here. Question here from Ashley. What is a good defense for a wage garnishment after a default judgment for missing corp? The answer was filed with affirmative defenses, but the court date was missed.

Greg (24:45):

Alright, so you've already lost the case in that situation, so acknowledge that you've lost the case. Now what you can do in this situation is you can file a motion to set aside the judgment and what that is, is you're basically asking the court, Hey, this case wasn't decided on the merits. It was decided on a legal technicality because I wasn't there for the hearing. So will you basically grant me forgiveness and let's go back to the beginning of the case and start over fresh. Now you'll have to research the rules of civil procedure in your state and see when a judgment can be set aside. But if it's just like I didn't go because I was scared or something like that, the judge is probably not setting aside the judgment and now you've got to try and negotiate this debt in a situation of a wage garnishment.

If it was something like I never received notice of the hearing or I was in the hospital and unable to contact the court and let them know that I couldn't make it, I mean some kind of legitimate excuse, and you file that motion to set aside the judgment and ask the judge, then that's probably getting granted and then that wage garnishment will go away and you'll go back to the beginning of the case. It doesn't get rid of the debt, just goes back to the beginning of the case. I would say it probably doesn't hurt to just try and file a motion to set aside the judgment, even if it's unlikely to work. And then you can use that as again, as a point of leverage in a settlement negotiation. It might not work, but that's probably what I would try is file a motion to set aside the judgment, try and negotiate. If that doesn't work, then just try and negotiate your wage garnishment away.

George (26:25):

Yeah, for sure. It sounds about right. Tough, tough news there. Actually having the judgment, this wasn't technically a default judgment, right, Greg? It's just a judgment was entered because she filed an answer.

Greg (26:39):

Well, it's probably still a default judgment. I mean, it could have been a summary judgment. Usually it's probably a default judgment because basically it's the court saying you're not showing up and participating in the court process. So I'm just entering an automatic judgment against you. So I mean it depends on the state on how it's technically classified, but it essentially works the same way as a default judgment in that, well, you didn't file an answer in this case. Well, you didn't come to your court date. It depends what the court date was. If it was just like a pretrial hearing, it could be a default judgment. If it was like your trial, then it's probably going to be like a judgment judgment,

George (27:18):

Right? This one's from Dennis. What about for really large debt and very large debt collection companies that refuse to negotiate? It goes on here. I'm in a bit of a nightmare scenario. I had a large judgment put against me in South Carolina in November, 2015 for a commercial loan that I was the guarantor on that sounds rough. Those commercial loans can be really big. I moved to Florida in 2017, rebuilt my credit, I went from a 475 credit score to an 800 plus. Good job. It's a big turnaround and just a few years. So great work. It's a fine example there. But then I purchased a condo in Florida, which I sold in December, 2024, and that's when all hell broke loose.

Greg (28:09):

I can give you some thoughts on this. I mean, basically this is where you're into real tough situations, like you said on these commercial loans where you're like a personal guarantor and we're talking about huge amounts of money now, they won't negotiate with you. I think one thing is oftentimes when these cases start, you try and negotiate and you don't get anywhere. It's extremely common as a case goes on for the parties to sort of come together. I have tons of cases that they don't settle right off the bat, and then as time goes on and you show you're going to defend yourself, then they'll continue to negotiate. I think with these large debts, they're a lot harder to negotiate because we're talking about large amounts of money that just like a single person isn't going to be able to come up with. And like you said, George, a lot of times it can end up in like, look, maybe you've got to sell your home and use some of the proceeds to pay that off.

I think that a lot of people in this situation end up filing for bankruptcy that a lot of times is the thing that is necessary when you're talking about these large commercial loans. But as far as the negotiation part of it, well, just because they won't negotiate now doesn't mean they won't negotiate later because they've still got to find a way to collect the money, and as they go through the process and find more and more that it's less likely that they're going to get any money, they're more likely to take something down the road. But I would say that with these large commercial loans, usually what ends up happening is you end up selling your house or you end up going into bankruptcy.

George (29:45):

Greg, we got a bit more info here from Dennis. He's saying apparently they sold my debt and judgment to a very aggressive collection company who domesticated the judgment against me in Florida with no notification, garnished my bank accounts, and seized a lot of money. Are you familiar with that domestication process? I haven't heard of that happening very often. I guess they,

Greg (30:06):

Yeah. So basically what happens is, let's say I'm in Utah and I run up some debt here in Utah, and then I move to Florida and all my assets are in Florida, so they get the judgment against me in Utah, but I can't do anything with that judgment because there's no assets to collect on in Utah. So I have to then open a case in Florida and basically say to the courts in Florida, I've got this Utah judgment, will you recognize it as a Florida judgment? They recognize it as a Florida judgment, and then I can go through the Florida courts to collect on assets in Florida. That's called domestication. So that's what's happening to him, it sounds like, is they've got the judgment against him elsewhere. Then they domesticated that judgment in Florida where he had his money and property and whatever.

George (30:51):

That's a pretty, imagine, that's a pretty straightforward process for the collector to do between most states. I imagine Some states give 'em a hard time, but usually that's going to be pretty straightforward.

Greg (31:01):

It's going to be pretty straightforward between states. It doesn't happen a lot in small consumer debts because you're going to have to hire lawyers in multiple jurisdictions to do this. So if you're talking like $5,000, this probably isn't happening to you when you're talking about these large commercial loans. There's enough money there that they're going to hire the lawyer in your original state and they're going to hire a lawyer in your second state to move that judgment. So it can be expensive for the creditor, so it's probably going to take a large amount of money for there to be justification for them to do,

George (31:30):

Right? Yeah, Dennis, hopefully you can rebuild, and it sounds like you've been great financially before in the past. Hopefully you can rebuild here. Feel free your situation. Bankruptcy can be an option, especially if the debt to income ratio is super high, right? I'd go ahead and calculate your debt to income ratio, see what that looks like as an indicator for whether you should do bankruptcy. If chapter 13 is all that's available to you, good chance that settling will be better for you economically if you're in a position where Chapter Seven's available, and that can be a win for you. You can get a big discount on settlement when you're working with the collector to get things settled, so that could be a big win for you as well. So you have lots of options and there you go. Okay, folks, that is all we have time for today on the debt hotline.

Again, if you want to make sure your question gets prioritized for next time, just go ahead and call in to the hotline at 8 1 8 1, and if you are actively being sued or you just have debts that you want to settle, you can go over to solosuit.com and you can get started over there. Or you have a lot of valuable stuff just on our dashboard where you can go, you can see all of your accounts, all your cases that you're dealing with. You can take a look at your credit score, you can get the credit report and things. You can take a look at all of your debt accounts that are open and work on getting all of those resolved and get back on your feet. Greg, thanks so much for coming on the show.

Greg (33:21):

Yeah, happy to be here.

Disclaimer: The information presented in this podcast is intended strictly for general informational purposes and should not be construed as legal, financial, or investment advice. Solo and its hosts are not licensed attorneys, financial advisors, or other certified professionals. While select guests may hold active professional licenses, their contributions are purely for educational and thematic discussion. They're not delivering professional or personalized advice. Solo is not a law firm, does not offer legal representation and must not be relied upon as a substitute for professional legal counsel. It is also not engaged in debt, settlement, credit repair, or financial counseling services, so provides self-directed software tools designed to support users in navigating their own legal and financial situations. Participation in this podcast is not establish an attorney-client relationship. Listeners are encouraged to consult with attorneys or licensed professionals for guidance specific to their circumstances. The opinions expressed by podcast participants are their own and do not necessarily reflect the views or official positions of SoloSuit Inc. Doing business as Solo or any affiliated organizations.


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