If a judgment has been entered against you for a delinquent, unsecured debt, you may be offered a stipulated agreement.

Are Stiplated Agreements a good deal?

It depends.  When you signed up for your credit card or took out an unsecurred loan, you agreed to the terms and will be held accountable if you don't pay.

Most creditors will try several tactics to get you to repay what you owe, but if unsuccessful, they may decide to file a complaint in your local county court.

You'll receive a summons and since you owe the money, there is really no reason to answer (respond) or appear to explain yourself.

The creditor (the plaintiff) will be awarded a default judgment in the future if you do not arrange a plan to repay the debt you owe.

With the judgment in the creditor's favor, they can now seek:

• to garnish your wages or
• levy your bank account

But before they do, they would most likely agree to a stipulated agreement, whereby you agree to repay all or a portion of the debt owed.

Each state has a maximum interest rate that can be charged during a stipulated agreement.  In many cases you should be able to negotiate a 0% rate.

A Stipulated Agreement is not a bad deal if:

• you currently receive W-2 income from your employer or
• if you usually keep a substantial amount of fund in your bank account

In a wage garnishment, an employer would be forced to deduct an average of 25% of your net take home pay each pay period!

For most people, this would prevent them from paying the important bills like the mortgage or rent, food, utilities, etc.

So, by accepting a stipulated agreement for a lot less than the wage garnishment would be might be in your best interest.

However:

• If you are retired and receiving a pension or Social Security, these funds are exempt from garnishment.
• If you are receiving unemloyment income, these funds are exempt.
• If you are disabled and receiving Disability Income, these funds are exempt.
• If you are self-employed, it is very difficult for a wage garnishment to be enforced as most self-employed people take a very small "income" and in most states, this would be exempt from wage garnishment.

In those cases, you would NOT agree to a stipulated agreement but should negotiate a settlement, usually a a substantially reduced amount.

Before accepting a stipulated agreement, you should seek the advice of a debt management or debt settlement specialist.

In most cases, a settlement agreement can be negotiated before the creditor decides to seek legal action.

A stipulated agreement should only be considered if all other options have been exhausted.