We have been in the judgment collection game for years. Throughout our time in this industry, we have seen just about everything. So when a new client comes to us after having given up on collecting, we are prepared.
Did you know that the vast majority of money judgments in the U.S. are never collected? In so many cases, creditors give up and walk away. The big question is, why? Here the top ten reasons judgment creditors give up:
10. A Settlement Is Reached
Although settlements between debtors and creditors are not the norm in cases where creditors give up on collecting, it does happen. Attorneys for the creditor and debtor may get together and work out some sort of mutually beneficial settlement – usually in the form of a lump sum payment for less than the full amount owed.
9. Legal Issues Arise
A creditor may be forced to give up collection efforts by legal issues that arise after the fact. For example, some states allow debtors to raise questions of judgment validity or enforceability. Rather than spending any more time and mine on the matter, a creditor may simply choose to turn around and walk away.
8. The Judgment Is Sold
Judgments are considered assets under the law. As such, they can be bought and sold. Sometimes a creditor gives up collection efforts by selling the debt to a collection agency or other debt buyer. For the record, Judgment Collectors does not buy judgments. We offer a collection service based on consignment.
7. Debtor Circumstances Change
Collection efforts may cease if it has been determined that the debtor’s circumstances have changed. Maybe the debtor loses his job and has no assets the creditor can go after. It might be in the creditor’s best interests to put collection efforts on ice until things improve.
6. Creditor Circumstances Change
It is not only the debtor’s circumstances that can change, so can a creditor’s. Maybe the creditor is a small business that changes hands through a sale. The new owner has no interest in continuing collection efforts.
5. The Debtor Files for Bankruptcy
In some states, bankruptcy offers protection against judgment collection. It is not unusual for attorneys in such states to recommend a bankruptcy filing following a significant award being offered in a civil lawsuit. Once a bankruptcy is approved, the debt is permanently discharged.
4. The Judgment Expires
Judgments come with statutes of limitation. In most states, this means creditors have 7-10 years to collect. If they fail to do so and do not file to renew, the judgment expires and that is the end of that.
3. The Creditor Loses Track of the Debtor
Many times, an outstanding judgment goes unpaid because the creditor loses track of the debtor. The debtor seemingly disappears, and they are never heard from again. It is not a good situation but one that happens all the time.
2. Collection Costs Are Too High
A creditor may decide to suspend collection efforts because such efforts are costing too much money. Granted, debt collection can be expensive if you don’t know how to do it efficiently. That is often the case with judgments.
1. The Debtor Is Judgment Proof
Finally, the number one reason judgment creditors give up is learning that their debtors are judgment proof. This means debtors have insufficient income and no valuable assets. Debtors also have no reasonable prospects for the future.
Do any of these things sound familiar? Do they apply to a judgment you are trying to collect? If so, let us talk. Judgment Collectors might be able to help.