As a collection agency specializing exclusively in judgments, we have our fair share of frequently asked questions. One we hear a lot goes something like this: “The statute of limitations on my judgment is coming up. What should I do?
This question stems from the reality that judgments have expiration dates. The dates vary from state to state, but 7-10 years is about average. This means a judgment creditor has 7-10 years to collect a monetary award. If a creditor fails to do so, there are consequences.
It would not be possible for us to advise you on your next move in a blog post of this nature. Every case is different. But below is a general discussion of what creditors need to consider as statutes of limitation approach. If you are getting close and you need help, consider contacting us here at Judgment Collectors.
Statutes of Limitation
People normally think of statutes of limitation in terms of criminal prosecution. But the same concept exists in civil law. Within the civil court system, a statute of limitations can be applied to judgment enforcement. It puts a limit on how long a plaintiff has to seek enforcement of a judgment against another party.
Enforcing a money judgment equates to collecting the amount in due. So a statute of limitations on such a case would limit the amount of time a creditor has to collect.
As a Statute of Limitations Approaches
It has been our experience that creditors are wise to always keep the statute of limitations in mind. Even at 7-10 years, a judgment’s expiration date can come up more quickly than a creditor realizes. As a statute of limitations approaches, a creditor has several choices:
- Expiration – A creditor could allow the statute of limitations to come and go. That would mean letting the judgment expire. An expired judgment can no longer be enforced via court-sanctioned means.
- Renew – A creditor could also attempt to renew the judgment for another term. It is usually just a formality. It involves filing the appropriate paperwork with the original court prior to expiration.
- Revert – It is possible, in most cases, to revert to the state that existed prior to the creditor’s original court case. Here, the judgment has expired but the creditor remains committed to collecting the outstanding debt via standard collection means.
Note that reversion only applies to cases where a legal debt existed before the two parties went to court. Such cases typically involve debt collection lawsuits. The original debt still exists even if a judgment is allowed to expire. But without a judgment to work with, the creditor can no longer utilize things like wage garnishment and writs of execution.
Assess the Chances of Getting Paid
All of this is couched in the caveat of the reality of getting paid. Let us say a creditor is approaching 10 years of unsuccessful collection efforts. What are the realistic chances of success at some point down the road?
A debtor’s circumstances could change, thereby allowing payment. Renewing for another 10 years would be appropriate in such cases. But if it’s pretty clear that a debtor has no realistic prospects on the horizon, it might just be better to let it go.
One way or the other, a fast-approaching statute of limitations dictates that decisions need to be made. It is never a good situation to be in. Although there are never any guarantees, the best way to avoid having to deal with a statute of limitations is to work out a way to get paid as early in the process as possible.