Legal Question in Credit and Debt Law in California
client trust account - settlement funds guarantee?
Greetings:
I have a question regarding discussing settlement for repaying a debt. It appears that the opposing plaintiff counsel requires the funds to be guaranteed and the defense counsel says the only way to do that is by having the funds in the client trust account. My question is, is there any other ways to guarantee the funds for the debt since it seems like this would be putting out all the cards on the table since when discussing debt, shouldn't it be the lesser the amount and the longer repayment period the better since it's 0% interest. Any alternatives?
1 Answer from Attorneys
Re: client trust account - settlement funds guarantee?
In the creditor's mind, the payment should be made up-front, all at once, for the full amount. Your desire, I'm sure, is to minimize the amount and stretch it out over a long period.
Typically, settlements of debt will be accompanied by a stipulated judgment that would be held or not enforced unless you default. Thus, if you were to default, you would no longer owe the compromised amount, but would again owe the full amount, plus interest, plus attorney's fees, and there would be a judgment against you. Then all remedies for collection would be available including a debtor's examination, execution against wages and bank accounts, assets, etc.
If the money were to be held in a trust account, in my opinion, it would not be an incentive for you, since you no longer would have use of the money and could be financially impossible for you to do.
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