If we could point to one thing that most of our collection efforts ride on, it would be debtor assets. After all, a debtor without assets may be legitimately unable to make good on their debt. That’s why it pays to know a debtor’s assets. If we know what a debtor owns, we can find a way to get the judgment taken care of.
Our job as judgment collectors is to use the tools and methodologies available to us to uncover debtor assets. Once uncovered, we have leverage to encourage the debtor to pay. Oftentimes that means being able to work out a payment agreement to the satisfaction of everyone involved. Other times, we are left with no choice but to take more serious action.
Income Is an Asset
It is not unusual for people to think of assets as things like real estate, stocks and bonds, etc. What most people do not realize is just how broad the asset category is. If you were to compare everything you own against every debt you owe, what you own would show up in the asset column. With that understanding, income is an asset.
Here on our website, we discuss a case study in which we were collecting on a judgment levied against a manufacturer. The manufacturer had slow-walked payment for years based on claims of not making any money. But it turns out that the accrual method of accounting they were using created a misunderstanding of the company’s cash flow.
When we accounted for that issue, we discovered the company was making money. It turned out they did have net income they could devote to paying their debt. We worked out a payment plan and that was that. We didn’t have to deal with real estate or any other hard debtor’s assets because the company’s net income was enough.
Property As an Asset
More often than not, our interactions with debtors involve some sort of real property. There have been cases in which our judgment collection efforts have turned up land or other types of property that debtors were trying to keep hidden. We have worked other cases in which debtors sold property, yet we were able to discover details of the sale and let the debtors know we were aware of sale proceeds.
In both types of cases, we have assets to work with. Property a debtor still holds is obviously an asset that gives us leverage. A piece of real property always allows the option of foreclosure. This works to our advantage in working out settlements with debtors.
On the other hand, proceeds from the sale of a piece of property are also considered an asset. Having knowledge of such proceeds also gives us an advantage. Once we know that a debtor has disposable cash through which a debt can be paid, we can leverage other tools to access that cash. This is often enough to motivate a debtor to make good on the judgment against them.
Assets Fuel Judgment Collection
The bottom line is that a debtor’s assets are the fuel that drives collection efforts. In a typical judgment scenario, a debtor is required to report their income and assets to the creditor. This includes current employment status. Assuming that a debtor is upfront, the creditor is able to accurately assess income and assets in order to work out payment terms.
Unfortunately, debtors do not necessarily offer accurate information. That is where we come in. We make it our business to uncover unreported or hidden assets that we can use as leverage to collect payment.