Payment agreement - judgment legal?

We have a default judgment dating back to 1999 and have had problems with this lawyer from the start. We were going through a really bad time financially, were absolutely terrified when we were served with the papers and didn't even realize that we could have done something about the judgment. We couldn't afford a lawyer. Anyway, we set up a $150/month payment arrangement which we sent faithfully for two years. We were paying this directly to the creditor. Near the end of 2000, I went to do a payment by phone with the creditor, and I was told that we were to start making payments to the lawyer's office. No one had ever told us this. I called the lawyer's office and was told this was true. I then told them that we were no longer receiving statements from the creditor. It was clearly stated in the letter that we received regarding our payment arrangement that we would receive monthly statements and that our payments would go to the creditor so now both of these things had changed which was news to us. We had already been making payments on this debt for almost two full years, and then we received a "post judgment letter" telling us that we owed over $8,000 which should have been maybe $3,000. I called the office and told them that we wouldn't sign it because this was not right. They had sent us this letter on an account that we had paid in full in February of 2000. It was now January of 2001! We didn't hear from them again until this year, 2003, in July. The account had been bought and they now wanted money. Now I'm finding out that they shouldn't have even filed the judgment because we were already in a payment arrangement and had received the letter stating that no legal action could be taken against us. When the lawyer signed the paper to go ahead with the judgment, it was February of 1999 so we had already made one payment of $150. When it was filed in our court, it was April of 1999, so 3 payments of $150 had been made. When it defaulted it was June of 1999 so we had already made 6 payments by this time. When he filed this judgment, he didn't even deduct what we had paid. He just used the original total. I realize that there is probably nothing we can do at this point, but I'm so angered that we let someone scare us to the point that we didn't even pay any attention to what was happening. We have been going back and forth regarding the amount due since they called in July as I feel we shouldn't have to pay interest for these last two years as they never corrected the total in January of 2001. All I have heard is how confusing it was for them because we had two accounts from the same creditor. I don't care if we had 50 accounts! Isn't it their job to keep this straight? Imagine getting a post-judgment letter from them on an account that was paid in full 11 months earlier! They wouldn't reduce our total and told us we could pay off a balance of over $8,000 at the $150/month or they'd settle for $3,600. We've been dragging our feet, and now they have filed a garnishment on our checking account. Here we thought we were trying to settle on something, and then they went and entered this already in August. I was in total shock when we found this out on Monday. We have agreed that they we'll pay the $3,600. I just want this to be over with. It's too stressful, and I have more important things to deal with like my 3 children, a husband and my health. I didn't sleep a "wink" on Monday night, and I can't live like that. I hope that maybe by posting this it will help others who are dealing with judgments, etc. Don't let anyone intimidate you. Stand up for yourself, and be sure things are being done in a correct manner. I guess my main question is was it legal for them to file this judgment when we had the payment arrangement, and I had the letter saying that no legal action if we didn't default. As I said earlier, we didn't default and paid faithfully for two years.

 

The payment arrangement was set up in January 1999, and he filed the judgment in February of 1999. Our first payment was set up for January of 1999 which we paid, and he noted that the payment was received right in his payment arrangement letter. How did we default. His letter of January 1999 says no further legal action will be taken against you unless you default. How could we default when we had just started paying according to the arrangement?

 

So then a judgment isn't considered to be legal action and can be filed at any time whether you're under a payment agreement or not and whether you are paying or not? I could see the judgment being filed when we defaulted on our payments in 2001 but not two years earlier when we were just starting the payments. I guess I have lots to learn about the legal system.