Judgement creditors are usually required under the procedures of the judgment court to report satisfaction of the judgment to the court within a certain period after its satisfaction. So they most likely have a requirement to officially report its satisfaction, regardless of the amount they accept. I presume that the judgment has not expired?
The key issue, as I see it, is to make sure that the record clearly shows that payment is considered a satisfaction of the debt, and thus the judgment, by the judgment creditor. I would include a cover letter with the payment clearly identifying the agreement reached, and the statement that the payment is remitted per that agreement.
The side-issue is how they report to the CRA. They must report a $0 balance if satisfied. As settlement for less than the full debt, they are entitled to additionally report a special comment of settled for less to your credit file. That special comment identifies that you had a prior debt that, while not satisfied, you did not fully pay the amount indebted. I would ask for their agreement not to report that additional special comment, which with its absence, will make the debt appear in your CR the same as if paid in full.
