Companies stay in business because they collect on their debts. If a debtor fails to repay a loan or a debt, you have the right to take steps to collect it. Debt collection can be difficult and sometimes results in being unable to get paid. One of the first steps you may take is to contact the party to request payment. If that fails to get results, you may need further action. Parties may come to a settlement agreement inside or outside of court. Understanding a consent judgment vs. settlement agreement is helpful in determining the best way to proceed.
What is a Consent Judgment?
A consent judgment is also called a consent order or consent decree. It is a legal order provided by a judge in court. The consent judgment is actually a settlement agreement that a court has approved. It is an agreement between parties who agree to a specific settlement. A consent judgment is legally binding and is enforceable by either party. A court order is a legal judgment that both parties must abide by. If a party fails to comply with a consent judgment entered into in court, you can take further legal action to require their compliance.
Understanding a Settlement Agreement
A settlement agreement is an agreement that parties agree to outside the legal system. Settlement agreements are legal contracts between parties. However, it has not yet been provided in a court order. While settlement agreements can be verbal, they are generally made in writing. Both parties must sign the document and agree to the settlement. If a party does not follow through, the other party may file a lawsuit. For example, if a creditor enters into a settlement agreement with a debtor and the debtor does not comply, the creditor may elect to litigate the matter in court.
Can I Appeal a Consent Judgment?
Both parties agree to abide by the consent judgment. One of the important things to keep in mind about consent judgments is that they are generally binding and cannot be appealed. Parties cannot change their mind about the settlement terms after a consent judgment is ordered. Once the judge approves a consent judgment, both parties must adhere to the terms. Generally, the only way to appeal a consent judgment is if one of the parties committed fraud or if both parties made mistakes in the agreement.
Consent Judgment vs. Settlement Agreement
Many people wonder about a consent judgment vs. settlement agreement and which one is better. The answer depends on the specific details of your situation. However, it is almost always best to make your settlement agreement legally binding by taking it to a judge. When both parties agree, the judge will make a consent judgment, which is a settlement approved by the court. Although a settlement agreement may be legally binding, it can be more difficult to enforce. Once a consent judgment is in place, parties cannot disagree or dispute the agreement.
Collection Cases and Consent Judgments
Collection cases can be complex and often require assistance from a qualified collection attorney. These situations often require litigation and settlement discussions. If parties agree to resolve the case with a settlement agreement, you must ensure that it is legally binding. Consent decrees are court orders, so you will have legal recourse if someone does not abide by the judgment. You will have fewer steps to take if a party does not follow the order approved by the judge.
Sometimes, it may be easier and less costly to enter into a settlement agreement with a debtor. A debtor may prefer to enter into a settlement agreement rather than a consent judgment because they won’t have to go through the court system. Each case is different, and you will need to weigh various factors when you decide how to proceed. Some factors to consider are the ability of the creditor to pay, the credit history and employment history of the debtor, and others.
Seek Legal Guidance
Debt collection is a critical part of your business, but it can be complicated. The decision to choose a consent judgment vs. settlement agreement is one that you can discuss further with your collection attorney. Contact our experienced legal team at Snellings Law, LLC for a consultation about your legal needs. We are available to answer your questions and guide you through the legal steps you need to take. Contact Snellings Law, LLC today or chat with us online for further details.