The judgment collection space is dominated by terms people outside of the industry do not normally recognize. One such term is the ‘judgment collection loop’. Needless to say, getting caught in the loop isn’t good. How do you avoid doing so? By working with a judgment collection specialist like Judgment Collectors.
Every judgment creditor experiences the loop to some extent. The process of closing the loop is essentially turning a paper judgment into a financial obligation that is ultimately resolved. Resolution can be accomplished in one of several ways:
- Full or partial collection.
- A settlement between the parties.
- Writing off the judgment as bad debt.
The loop is closed once resolution has been documented. At that point, the issue is over and done with. The judgment creditor no longer has a legal right to continue pursuing collection efforts.
Recording Opens the Loop
If documenting resolution closes the loop, recording a judgment opens it. Recording is a task assigned to the court clerk in the county in which the judgment was rendered. In most states, a judgment is not considered official until it has been recorded.
Creditors should understand that collection efforts cannot begin until recording is complete. In some states, recording takes place immediately following the conclusion of the trial. In other states, it could take a day or two.
Once the loop is opened, creditors have access to a variety of tools they can use on the road to resolution. They include things like property liens, wage garnishment, bank account levies, and asset seizures.
Time Limits Are in Play
Another thing judgment creditors need to understand is that the loop will not remain open perpetually. Time limits are in play. In other words, a creditor has only a limited amount of time to recover what is owed. A state’s statute of limitations governs that time.
Statutes of limitations on money judgments run 7-10 years on average. Here in Utah, the time limit is 8 years. Fortunately, most states allow judgment creditors to renew their judgments at least once. But if a judgment is allowed to expire, it is automatically resolved, and the loop is closed.
How a Collection Specialist Closes the Loop
Closing the loop without professional assistance often proves challenging to judgment creditors. So much so that we urge creditors to work with collection specialists whenever possible. We are one such specialist serving clients in Utah and ten additional states.
How does a collection specialist close the loop? There are many strategies in play:
- Asset Searches – A collection specialist will conduct a thorough asset search immediately upon taking a case. Additional searches may be conducted in the future, as needed.
- Active Enforcement – Collection specialists use active enforcement strategies including garnishment, levies, and writs of execution. All such strategies leverage debtor income and assets.
- Negotiations – When appropriate, the collection specialist will attempt to negotiate with the debtor to reach some sort of amicable settlement. Successful negotiations can get a judgment resolved fairly quickly.
- Skip Tracing – There are times when a collection specialist must locate a debtor attempting to hide. The specialist will use a tool known as skip tracing to that effect.
- Debtor Contact – There are also times when payment is delayed by simple miscommunication. A collection specialist will make direct contact with the debtor in an attempt to resolve the issue.
The end goal of money judgment collection is always to resolve the issue by securing payment. Whether that means full or partial payment, a judgment creditor’s best option for moving forward usually involves working with a collection specialist.