Why does that creditor want you to sign an “Agreed Judgment”?

Probably because you do not know what that means.

Whenever a civil lawsuit is filed, the plaintiff wins the case by obtaining a “judgment” against the Defendant. A “judgment” is the final determination by a court of proper jurisdiction of who wins the case. Sometimes, after a creditor files a civil suit to collect money from you, they will ask if you want to settle the debt by entering into an agreed judgment. An agreed judgment is as good as a regular judgment — except, of course, you have agreed to it. An agreed judgment, like a regular judgment, resolves the lawsuit.

The difference is that there is typically a settlement agreement that goes hand in hand with the agreed judgment that stipulates that you are to pay the creditor a certain sum, X, in order to satisfy the judgment amount, Y. By the completing the payment amount (or settlement amount), X, the creditor agrees that you will have satisfied the judgment amount, Y. In exchange for your promise to pay the discounted amount, X, the creditor promises not to “execute” or act upon the judgment, i.e. initiate bank account garnishment or seize nonexempt assets.

The danger in agreed judgments is that if you default in making the payments, the creditor, according to the terms of the settlement agreement, has a judgment against you for the full judgment amount, Y (minus payments that were made towards it, of course).