Lien and Judgment Negotiation

1. Locate your creditor and find out how much you owe: This can often be the most challenging part of lien negotiation. Creditors sell debt quickly and frequently so it often takes an experienced attorney who knows most of the main collection agencies to locate the debt, especially if the judgment is more than a year old. Sometimes, locating the creditor requires cold calling debt collection companies until you find the one that took it. If you don’t have the knowledge to know who to call, this will be hard if you’re trying this on your own.
2. Evaluate and explain whether it is worth it to try and negotiate the lien or judgment: Some liens are negotiable and some aren’t. If there is a chance that you can pay the lien off for less than you owe, you want to take advantage of that opportunity but if the lien is not negotiable, you want to know that up front so you don’t waste time.
3. Negotiate: Negotiation is an art. Simply saying to your bank “can I pay you less than what I owe?” will likely cause the creditor to just say “no, we want full payment.” You need someone to look at what you have going on financially to figure out how to request your settlement in the most persuasive way. 
4. How to deal with the challenge of equity in a negotiation: It can be particularly challenging to negotiate a settlement if there is equity in the property. If you’re set to walk away with funds following the sale of your home, the incentive for a creditor to settle goes down because they typically know you have enough money to pay them. Surprisingly, in some cases, negotiation can still be successful in this situation but you need to make sure it’s been handled correctly.
5. Presenting financial information to the creditor: The general rule is – don’t show a lienholder your financial information, especially if it will damage your chances at settlement. However, there are some times when presenting financial information will actually help prove that you cannot afford to pay the entire lien.
6. Gauging what a “good settlement” offer is: Creditors are in the business of taking advantage of you in order to get the most money possible. If you’re trying to negotiate by yourself, they may make you an offer for settlement early in the process but it’s hard to know if you should continue negotiating or take the deal. It’s helpful if you have someone helping you who knows when you’re being offered something reasonable or when you’re being made a “first offer” that should be pushed back on.
7. Understanding the negotiation timeline: Some creditors are very motivated to settle because they get financial incentives to settle quickly and close their files. Other creditors are small, disorganized, and unmotivated by time considerations. If you’re looking at completing a sale of your home or a refinance, you will need to know how long it will take to complete the settlement process so you can decide whether it’s worth it to you to try or whether you’d rather pay them off and move on.

If you have a lien or judgment attached to your home and would like to discuss the possibility of settlement or if you need help locating your creditor, please call me at (425) 654-1674.