Judgment collection agencies don’t automatically accept every case they are offered. Indeed, collection agencies assess cases on an individual basis. Each case has its own merits to consider. For their part, the collection agency wants to make sure it’s not getting into a situation in which a judgment is truly uncollectable.
Collections can be expensive. Likewise, collection agencies tend to cover their own costs throughout. So even if profit is relegated to a secondary position, collection agencies need to determine their own financial risks before taking on a case.
Common Considerations in Case Assessment
Every judgment collection agency has its own way of doing things. Judgment Collectors is no exception. We evaluate every case that comes our way. Those we accept result in an offer being prepared and presented to the client. If the offer is accepted, we get to work right away. However, there are things that need to be looked at during the initial assessment:
- Judgment Date – One of the first things a collection agency will look at is the date of the original judgment. The further back that date is, the more difficult collection is probably going to be. Older debts are not collection-proof, but they can be more challenging.
- Known Debtor Assets – Collection agencies look at any and all assets the debtor is known to have. If the debtor has any assets that could be used to secure payment, the creditor is in a good position.
- Unknown Debtor Assets – A collection agency does its best to evaluate whether a debtor could have unknown assets. If that’s the case, the agency can search for those assets during the early stages of collection.
- Potential Challenges – Next up are any potential challenges the debtor could file prior to collection efforts commencing. For instance, a debtor might appeal the judgment rendered against them.
- Collection Costs – It goes without saying that collection agencies need to assess their potential collection costs. If the cost of collection is more than the amount the agency expects to collect, it is not really worth getting involved.
- Previous Actions – A collection agency generally wants to assess any previous actions taken on the case. For example, if the creditor’s attorney tried to collect and failed, why? Previous actions tell collection agencies a lot.
There is always risk involved when attempting to collect judgments. Financial risks are the biggest concern. Few things in the debt collection industry are as frustrating as investing a ton of money in collection efforts and never seeing a penny in return. That amounts to money down the drain.
We do what we do because creditors so often struggle to collect unpaid judgments. But each case we take needs to be assessed on its own merits. That is the way our industry works.
Published September 1, 2023