Entering into an installment agreement is one way for a judgment creditor and their debtor to resolve an outstanding money judgment. All is well as long as both parties live up to their responsibilities. But what if the debtor fails to make installment payments? What are the creditor’s options?
Details of how to proceed in such a case would differ from one state to the next. This is because states regulate money judgment collection in different ways. However, we can offer some general guidelines that apply in most cases. They certainly apply in Utah, the home base for Judgment Collectors.
Notify the Debtor First
We have an idiom in English that says you catch more flies with honey than with vinegar. It is quite applicable to money judgment collection. In the case of a debtor failing to make installment payments, immediately heading to court and seeking further action against the debtor probably isn’t the wisest choice. It is smarter to notify the debtor first.
Contact the debtor through some sort of formal means and notify them that they are in default. Also remind them of the installment agreement they signed. Along with the notification, there should be a demand for payment. However, use a formal business tone. Avoid any kind of threatening language. In some cases, a formal reminder is all it takes to get a debtor back on track with payments.
File a Motion to Enforce
Some states, Utah included, make an additional legal procedure available to judgment creditors. The procedure is known as a Motion to Enforce Order. This is a motion that asks the court to enforce the installment agreement. And if that’s not possible, the court is asked to enforce the underlying judgment by taking enforcement actions on your behalf.
Judgment debtors fail to make installment payments for a number of reasons. Sometimes it’s carelessness. Other times it’s a matter of a debtor believing they can simply ignore payments and get away with it. A Motion to Enforce Order could change a debtor’s mind.
Pursue Other Collection Strategies
The interesting thing about installment agreements is that they aren’t ironclad. If the debtor breaks their end of the deal, the entire agreement is essentially voided. The judgment creditor is well within their rights to pursue other collection strategies. Indeed, we see this all the time with the cases we take.
Again, available collection strategies vary by state. As a general rule, here is a sample of what most states allow:
- Garnishing wages, bank accounts, or both
- Garnishing business income
- Placing liens on debtor property
- Asking for writs of execution against debtor assets
In cases where the debtor and creditor entered an installment plan with no further discovery, it becomes necessary for the creditor to learn as much as possible about the debtor’s income and assets before pursuing other collection strategies. Therefore, it may be necessary to initiate supplemental proceedings in order to gather the required information.
Suing for Breach of Contract
Finally, some states recognize installment plans that are separate from their underlying judgments. In such cases, it may be possible to sue for breach of contract. A successful lawsuit would create a second money judgment you could pursue.
Collecting a money judgment is rarely simple. Matters are further complicated when debtors enter into installment plans but then fail to make payment. If you are looking at such a situation, Judgment Collectors might be able to help. Let us talk about your case and its potential for collection. If we can help, we will make an offer that you are free to accept or refuse.