Paid MCA Judgment: 6 Checks for the Satisfaction Record

File a Satisfaction-piece with the County Clerk

You’ve got your receipt for paying the judgment in full. But if it’s in New York, that payment doesn’t clear the record automatically. To update the docket, the creditor is required to file a satisfaction-piece with the county clerk within 20 days of the date that you paid the money. Still, it’s up to you to ensure that piece is filed by the creditor. The trouble is that if they don’t file, that stale judgment is still on the record. If any of the checks below don’t pass, the same thing happens, and unsatisfied judgments can do damage.

When you look at the satisfaction-piece, be sure three things are correct. Did the creditor file within 20 days of paying? Is it notarized, like a deed? And, does it state the docket-book and page of the original judgment? Judgments are tricky: if the number is $5,000 or more and the creditor misses its 20 days to file, it owes you a $500 penalty you can recover in court.

Before you pay, get a written payoff figure. Interest keeps adding up, remember. Pay by check or wire, not cash, so that you can trace the payment and be sure it was actually received. After 20 days, check on the docket to see if the satisfaction has been filed, and if it hasn’t, send a follow-up letter.

Which Clerk to Search

A confession of judgment can only be filed in the county listed as your residence or where you live, and a business resides wherever it has a place of business, so that tells you which clerk to search. Does your business have more than one location? So keep this in mind: if you have a place of business in two separate counties in New York, check both for judgments. Each one is a lien against your real estate in that county, good for 10 years. Not only that, but if the creditor registered in other counties, those liens are still good, until they file a clerk’s certificate from the original one.

The sheriff’s side needs checking too. Let’s say the sheriff seized bank accounts. They can freeze your cash until the writ is satisfied, so make sure they know it’s all paid. When the sheriff collects on a judgment, it’s required to return the satisfied execution to the clerk. So if you paid the sheriff instead of the creditor, track it to be sure that’s done. And if the sheriff or the creditor is missing a step in the paperwork, you can get certified copies of the execution and the return and file them yourself.

UCC-1 Termination Statement

Then there’s the termination statement on a UCC-1 lien by the lender. That one operates separately from the judgment. Send a written demand for termination to the funder. The secured party has 20 days to terminate once it has your demand and nothing is owed, and it’s worth $500 if they don’t. But if there’s still money owed, or a commitment to lend more, the secured party doesn’t have to file it. Be on your guard when you’re using an open revolving line: that can defeat your statutory demand. If you close out a note, sometimes the funder just mails the termination instead of filing it. That means the public record doesn’t change until that termination lands in the filing office. You can search the filing office to confirm that it’s done.

Understand this about personal guaranties: they are usually a separate promise apart from the rest of the loan. Even if the plaintiff signed a general release, that may only apply to the company, not the owner. If there was a personal guaranty and a judgment, the guarantor could be a judgment debtor too. Always be sure the creditor names the owner, and make sure that satisfaction piece covers that person too. How this is worded can make it stick, so make sure the writing says the guaranty itself is over, not only the lawsuit. Put this language into your very first written deal, even if that’s in the form of an email.

The next thing to be sure of is, did the lawsuit itself really end? Even with a dismissal, keep in mind that it’s often without prejudice, unless the papers say differently. Make sure that if you resolve it, you have ”with prejudice” in writing, and settle costs and fees expressly, in case the other side wants to come back later.

If the other side was missing in action and you don’t have that satisfaction piece to hand the clerk, you can ask the court for help. You paid the money, so don’t be afraid to look at the file yourself, and if it doesn’t look complete you can make a motion to have the satisfaction entered on the docket without the piece.

If you settle for a reduced amount, you may end up on the hook for taxes. It’s easy to forget, but for tax purposes, canceled debt is generally taxable. But there are exceptions for bankruptcy and insolvency. A 1099-C is not a release. Before you sign that release, you should be on terms with the tax man.

Finally, be sure you have everything for a closing file, so you can show it to potential vendors or partners later. Don’t forget to include the satisfaction-piece, any UCC-1 termination statement, the dismissal (if any), and the final release. When you’re done, it’s a good idea to send it to anyone who might have asked about the case in the first place. Lenders, sureties, insurers and big vendors fit that bill. Keep it for your next financing.