The Ins and Outs of Collecting Unpaid Judgments

The Ins and Outs of Collecting Unpaid Judgments

Have you ever wondered what happens when a civil court case results in the defendant having to pay the plaintiff? Legally speaking, this sort of resolution to a civil case is known as a ‘judgment’. The one party is forced to pay the other whatever amount is due, plus legal costs. Unfortunately, there is little a court can do to force someone to pay a judgment entered against them.

Each state has its own rules pertaining to judgment collection. That being the case, Salt Lake City-based Judgment Collectors says there are some common tools for judgment collection available in most states, including:

  • wage garnishment
  • bank account garnishment
  • asset seizure and liquidation.

The extent to which these tools are used generally determines whether uncooperative debtors are ever forced to pay. There are some cases in which only the most persistent collection efforts pay off.

Time Limits on Judgments

Even when judgments are successfully entered against defendants, those judgments come with time limits. Most states limit enforcement to 7 to 10 years. A creditor who has still not collected at the end of the initial term can usually choose to let the judgment lapse or renew it for another seven years.

Unfortunately, there are serial debtors who know about time limits. Even inexperienced debtors learn about the limits from their attorneys. The result is that some of them do their utmost to evade collection in hopes of waiting things out. They often succeed.

Most Judgments Go Unpaid

Judgment Collectors says that the vast majority of judgments are never collected. Creditors have neither the time nor the resources to put years of effort into collection. They try the standard collection methods to no avail. Then they simply give up and move on. However, there are options.

Creditors can refer collection to their attorneys. Some attorneys are incredibly good at this sort of thing. Most are not. Attorneys are trained and licensed to practice law. As a result, there are not many that specialize in collecting judgments.

Another option is to turn collection over to a specialized collection agency like Judgment Collectors. As a specialized agency, a judgment collection firm does not take on general debts. They leave that to general collection agencies. Instead, an agency that specializes in judgments tends to focus exclusively on them.

Two Collection Models

When creditors do decide to turn their judgments over to a specialized collection agency, they generally have two models to choose from. The first is the sale model, the second is the contingency model.

1. Selling Judgments

A creditor can choose to sell its judgments to the collection agency outright. The agency agrees to pay a certain amount, which is rarely the full amount of the judgment in question. Once payment has been made, the creditor’s rights are terminated. The judgment is now the legal property of the collection agency, and that agency is free to collect as little or as much as it wants.

2. Contingency Collections

The contingency model works similar to personal injury attorneys who work on contingency. In other words, the collection agency does not get paid unless, and until, it secures payment from the debtor. In the meantime, the agency incurs all the costs of collection.

Collecting on outstanding judgments is not easy business. Success is often a matter of chasing down debtors and making it clear that you are aware of their assets. Some debtors are only encouraged to pay up when they understand that their assets are in jeopardy. That is why specialized collection agencies capable of getting the job done are so valuable.

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