When Settlement Can Spell Disaster

Beware the catastrophic settlement agreement. If not drafted correctly one could actually lose a hard-won judgment and exchange it for a mere settlement agreement. At that point one is faced with starting over, either  filing suit for breach of contract or a motion under CCP§664.6 to have the agreement enforced. Neither is preferable. Too, if the original judgment contained a cause of action which would survive bankruptcy, this could be lost if a new lawsuit for breach of contract is instigated.

That needn't happen if the settlement agreement is crafted with the right language. Where a judgment is already in place, the settlement agreement should indicate that in the event of a breach, the settlement agreement is automatically set aside and void, without need to return to court. Further, it should indicate that any 'stay' provided by the settlement agreement is  lifted as a matter of course, with the judgment immediately enforceable. An attorney may assist in drafting this; however, I've seen attorney-drafted settlement agreements which essentially resulted in the loss of the original judgment.