Debt collection has been a booming business in this country for decades. But now, a more specialized industry focusing on judgment collection is emerging. More and more collection agencies are focusing all of their efforts on judgments, using every tool at their disposal to track down debtors and make them pay.
Judgments are slightly different because they are the end result of litigation. For example, imagine a car dealership that self-finances all of its sales. That dealership might be forced to sue a customer who fails to make payment. A successful lawsuit would result in a judgment being entered against the customer.
By contrast, late utility payments being sent to collection do not qualify as judgments if no litigation is involved. They are just standard debts. They are less attractive to collection agencies because they do not offer the additional enforcement power of litigation.
Plenty of Tools to Collect
Judgment Collectors, a Utah collection agency in the judgment recovery space, explains that companies like theirs have plenty of tools for collecting on bad debts. One of the more frequently utilized tools is wage garnishment. Through a fairly easy and cheap process, creditors can garnish debtor wages to ensure a steady stream of revenue until the debt is completely settled.
Here are some of the other tools that judgment collectors have at their disposal:
- Post-Judgment Discovery – Discovery is the process of obtaining the necessary information to collect. For example, post-judgment discovery hearings can be utilized to gain information from otherwise uncooperative debtors.
- Property Liens – Judgment liens can be placed on the debtor’s real property. Think of things such as primary residences, vacation homes, and even investment properties.
- Bank Account Levies – Some states allow creditors to levy debtor bank accounts. Savings accounts and secondary checking and cash accounts are often the targets of such levies.
The long and short of it is that judgment collection can be a very profitable business if a firm knows how to use the available tools to its full advantage. Still, the legal tools are not the be-all and end-all of successful collection. Agencies also have to be adept at research and willing to keep at it until they succeed.
Voluntary vs. Involuntary Payment
Tracking down a debtor and convincing them to pay voluntarily is the ideal situation. Judgment Collectors says that such scenarios are fairly common. They say that that debtors sometimes just need a bit of encouragement from a collection agency to make good on what they owe.
When this is not the case, collection agencies have to use other means to get paid. These other means amount to extracting involuntary payment. This is where things like property liens and bank account levies come into play. A lien is one of the most effective ways to get payment from someone who will not offer it up voluntarily.
When a lien is placed on a piece of property, the debtor cannot sell or transfer it until the debt is settled. The sticking point, from the debtor’s perspective, is not having a clean title. The title will not be clean until the lien is lifted. And that will not happen until the debtor pays their debt.
Hiring a Judgment Collection Agency
From the creditor’s standpoint, hiring a judgment collection agency may be the best way to get paid. Some agencies purchase judgments outright. Others work on a contingency basis. Either way, a collection agency that specializes in judgments knows how to use every available tool to track down debtors and get them to pay. And these days, it is big business for specialized collection agencies.
