Judgment collection agencies work on cases involving both individual and business debtors. The key principles of collection apply across both types, but collecting from a business debtor is distinct in a number of ways. It is arguably more complicated as well.
If you are trying to collect from a business debtor, it pays to do your homework. You might also want to enlist professional help. Professional judgment collection could reap better results than your in-house efforts. With that said, let’s get to the three ways collecting from a business debtor differs from collecting from an individual.
1. Debt Complexity
Although judgments against business debtors tend to be subject to less restrictive regulations, the debts themselves can be more complex. This is because civil cases against businesses tend to be rooted in things like contractual disputes and disagreements over business debts.
Commercial judgments require a bit more analysis. They require more effort in understanding the debtor’s position, business assets, and negotiating leverage. On the other hand, collecting from an individual is pretty straightforward. It generally requires a standard property search and then a willingness to pursue strategies that include garnishment, property liens, and writs of execution.
Adding to the complexity of business collection is the amount of documentation involved. The volume of documents flowing back and forth can be fairly intense if the two parties decide to negotiate a settlement. This is where an attorney comes in handy.
2. Debtor Motivations
Individual debtors tend to be motivated by one of two things: the desire to resolve the matter quickly and the fear of losing valuable property. As such, negotiations with individuals tend to be a lot simpler. That’s not the case when dealing with a business debtor.
A business might prioritize debt payments based primarily on cash flow. If cash is tight, the judgment could fall further down the priority ladder. Businesses are also motivated by relationships. They want to preserve the most important business relationships they have, even if that means sacrificing nominal relationships along the way.
Such motivations can make it difficult for judgment creditors to find common ground. And that’s bad when you consider that collecting from a business debtor almost always requires significant negotiations.
3. Enforcement Via Debtor Assets
On the positive side of things, collecting from a business debtor can be a bit easier thanks to a larger number of nonexempt assets to work with. Businesses often have real estate in play. But that’s not all. Judgment creditors can look at things like:
- Bank accounts
- Accounts receivable
- Business equipment
- Patents and trademarks
Businesses tend to be more open to writs of execution against both cash and physical assets. Exempt assets are still in play, but creditors usually have more to work with when collecting from business debtors.
By contrast, individual judgment debtors tend to have fewer nonexempt assets. Moreover, an individual with limited income and no high-value assets could ultimately prove to be judgment-proof. It could be easier to get blood from a stone than collect from a judgment-proof individual.
Professional Help Is Still Advised
Collecting a judgment from a business debtor is very different compared to collecting from an individual. In some ways it is harder, in other ways it’s easier. Professional help is still advised, nonetheless.
Judgment Collectors is a Utah collection agency that specializes in money judgments. We would be more than happy to look at your outstanding judgments to see if we can help. We work on consignment, so you have nothing to lose by contacting us. Let’s see if we can work together to get you paid.