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Agreed Judgments to Secure a Settlement

It is not uncommon for a commercial creditor’s attorney to request an Agreed Judgment when they settle on a pending lawsuit.

An Agreed Judgment is basically an agreement from the debtor business that they owe a specified amount to a creditor without going to court. Typically it will include the original amount claimed by the creditor, attorney fees,back interest on the debt and court costs for filing the original lawsuit.

When a creditor agrees to an out-of-court settlement after filing a lawsuit, this is their collateral for the settlement in case the debtor defaults on the payment terms. They are primarily used when a payment plan is accepted by the creditor (rather than a lump-sum payment) and saves them from having to file a new lawsuit if the debtor business defaults on the payment terms with a settlement. Typically, the agreed judgment is dropped once all payments are received. Often times, they are never filed of record as long as payments are made as agreed so they do not reflect on the client’s credit report. These are referred to as “pocket judgments”.

Agreed Judgments are very common and should be expected under the above circumstances and are simply part of the deal with many out-of-court settlements.

Scott F. Soape


Scott F. Soape & Associates, LLC is NOT A LAW FIRM. No legal advice can or will be provided.

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