Debt collection is a pretty broad topic. Run an internet search on the phrase and you will find enough information to keep you busy for a long time. As for judgment collection, it is a bit more specific. That’s important to us for the simple fact that we are not general debt collectors. We specialize in collecting judgments. Judgments are all we do.
Perhaps you are wondering what distinguishes judgments from general debt. There are lots of little things, but the biggest difference is the legal status given to a judgment. Once you understand that legal status, it is easier to understand the implications of collecting judgments as opposed to general debts.
Judgments Are Entered in Court
Under the letter of the law, judgments are not technically debts. They are court decisions. They are decisions rendered in civil cases that can occur between all sorts of parties. In effect, a judgment is the court’s decision rendered in favor of one party and against the other. More often than not, judgments include financial penalties against the losing party.
When the judgment in a debt collection case is entered in favor of the creditor, the court’s decision recognizes the validity of the debt owed by the losing party. The debtor is now compelled to pay what they owe. In most cases, the court also adds the creditor’s legal fees, court costs, etc. to the bill.
By contrast, general debts have never gone to court. Consider a debt collection agency that specializes in medical debt. Hospitals, doctor’s offices, etc. send their unpaid debts to the agency who then collects on their behalf. There is no court involved in the process.
Judgments Have Implications for Collection
Why would a creditor go to court in hopes of attaining a judgment? Because judgments have implications for collection. The best way to understand those implications is to discuss some of the tools that creditors have access to once a judgment is entered in their favor. Consider the following:
- Garnishment – Many states allow garnishment of both wages and bank accounts. Garnishment is not possible without first obtaining a judgment.
- Property Liens – Obtaining a judgment also gives creditors the legal right to file liens on debtor property. A lien prevents a debtor from disposing of the target property without first paying their debt.
- Asset Seizure – Though asset seizure is generally a strategy of last resort, it is possible with the authority of a judgment. States allow certain types of property to be seized and sold to satisfy the debt.
Having access to these additional tools is yet another difference between general debt collection and judgment collection. A good judgment collection agency that knows how to use the right tools for each case stands a better chance of success compared to general debt collectors and creditors themselves.
Judgments Also Leave Trails
Because judgments are essentially court orders, they leave trails behind. These are trails that debt collectors can follow years down the road in pursuit of a debtor who continues to evade payment. We will not get into how this all helps our investigative efforts. Just trust us that it does.
A big part of what we do is finding a debtor’s trail and then following it. More trails to follow gives us access to more helpful information that should ultimately result in successful resolution. Needless to say that we love all sorts of trails that lead us to where we want to go.
Judgments are distinguished from general debts by court decisions. That’s really it in a nutshell. With those court decisions come implications for collection, implications that make what we do easier and more productive.