No case we work as judgment collectors originates with us. We collect unpaid judgments which, by default, are the result of court action. Therefore, every case we work originates in civil court, where a debtor loses the case and has a judgment entered against them. So what’s the process? What actually happens when a lawsuit ends in judgment?
The states have somewhat different laws when it comes to civil lawsuits, judgments, and collections. Furthermore, collection practices may differ depending on whether the debtor is an individual, private business, or public corporation. But despite any state-by-state differences, general procedures remain pretty consistent./
In the aftermath of a civil lawsuit resulting in a judgment, the defendant (debtor) may be asked to disclose all assets and income to the plaintiff (creditor). When the defendant is an individual who was sued for failure to pay rent, missed co-payments, etc., a consultation generally takes place immediately after the court hearing. Attorneys for the creditor may give the debtor a limited amount of time to submit income and asset details.
Reporting income and assets is a bit more complicated when the debtor is a private company or public corporation. For example, let’s say a company loses a lawsuit and is now looking at a significant judgment. They are expected to pay the amount to a plaintiff class. However, the company and its directors have already filed for bankruptcy. Now what?
Assuming the debtor is forthcoming about income and assets, payment terms can be worked out. Attorneys for both parties do what they do and that’s the end of it. Individual debtors may be able to work out monthly payments. If not, wage garnishment is on the table as well.
Private businesses and public corporations may pay judgments out of cash reserves. They might also turn to their insurance companies depending on the origins of a lawsuit against them. It is not unusual for insurance companies to make payments on behalf of their clients.
Unfortunately, debtors are not always forthcoming in either reporting income and assets or making payment. That’s why Judgment Collectors exists. We and our competitors step in to assist creditors when debtors fail to meet their obligations. We take more aggressive collection efforts rather than allowing debtors to avoid paying by misreporting income, hiding assets, or flat-out refusing to work out an acceptable payment agreement.
When more aggressive collection efforts are needed, judgment collection relies heavily on asset discovery. It is our job to turn up every stone and look around every corner. If a debtor has any unknown assets out there, it’s our job to find them. Once found, assets become leverage for swift judgment collection.
In a perfect world, judgment collectors wouldn’t be needed. Our industry would not exist because debtors would pay their debts. But this isn’t a perfect world. Not only do creditors have to turn to companies like ours to get paid, but they also sometimes have to wait a while. Simply put, collecting on judgments sometimes takes quite a bit of time.
The good news for Judgment Collectors’ clients is that we bear all the costs. Once clients turn their cases over to us, they don’t spend another dime. They also don’t invest another minute of their time. We take full responsibility for the case and only get paid when we collect.
What happens when a civil lawsuit ends in judgment? The debtor is supposed to pay up. When that doesn’t happen, Judgment Collectors gets to work.
Published January 11, 2022