Imagine taking someone to Small Claims Court, winning a civil judgment against them, and then watching as they are thrown in prison until the debt is satisfied. What is being described here is known as debtors’ prison. Debtors’ prison has been outlawed in the U.S. These days, we rely on judgment collection instead.
Judgment collection is the process of making contact with a judgment debtor, discovering that person’s non-exempt assets, and working out some sort of arrangement through which the debtor will pay what is owed. It is time-consuming and complicated. So much so that the vast majority of judgment creditors never follow through in order to secure full payment.
Debtors’ prison was a common tool for forcing people to pay what they owed in days gone by. A debtor would be sued in court similar to how we do things today. If they lost the suit and did not have the money to pay upfront, the debtor was thrown in prison and forced to work off the debt through labor. Outside funds could always be procured to pay the debt as well.
Although debtors’ prison was popular in both Western Europe and the U.S., it is an idea whose time has passed. Federal law banned the practice of debtors’ prison in this country decades before the start of the Civil War. However, the practice was still common in Western Europe until the mid-19th century.
Debtors’ prison has long been controversial. Thank goodness it is all but nonexistent today. Nonetheless, parties still sue one another in civil court. Judgments are still rendered, and creditors still need to collect from debtors. We just go about things differently in the 21st century.
The ‘winner’ in a civil lawsuit is known as the judgment creditor. It is that person or entity’s responsibility to handle collection efforts. Courts are only involved in collection on a limited basis. Civil courts certainly cannot force debtors to pay.
In some cases, judgment creditors and debtors are able to work out reasonable payment plans. A payment plan might require that the creditor accept monthly installments over many years. But that is better than nothing at all.
When payment plans cannot be worked out, judgment creditors need to take enforcement to the next step. That’s where a collection agency like ours comes in. Here at Judgment Collectors, we assume all collection efforts on behalf of our clients.
What we can actually do to help enforce a judgment is regulated by state law. In addition, regulations can differ quite a bit from one state to the next. That means we can give you an overview of what judgment collection involves. However, we cannot get into any details.
One of our jobs is to attempt to make contact with the debtor. That might mean we have to do a little bit of investigating to find the person. We have lots of tools for doing so, including skip tracing.
Another task we have to undertake is discovering the debtor’s assets. We need to look into things like second homes, valuable collectibles, boats and planes, and other types of non-exempt assets. Knowledge of a debtor’s assets gives us a fuller understanding of how we can go about assisting with enforcement.
It is a good thing that debtors’ prison no longer exists. On the other hand, modern judgment collection can be difficult and challenging. It is the tool we now have available to us, so we use it to our clients’ advantage.
Published October 27, 2023