The statute of limitations often comes up when speaking with new clients about collecting their money judgments. Most states have a statute of limitations of 7-10 years. This means the creditor has 7-10 years to collect. Believe it or not, it actually could take that long. Sometimes creditors need a full decade to get paid.
A general rule in this business stipulates that the longer it takes to collect, the less likely a creditor is to get full payment. So time is usually the enemy. But there are circumstances dictating the exact opposite. Such circumstances are usually associated with judgment-proof debtors.
No Ability to Pay
A judgment debtor with no realistic means to pay what he owes is judgment-proof. He has little to no earned income and no assets worth going after. He has no prospects for the immediate future, either. Yet a judgment-proof debtor may not be permanently judgment-proof. That is where the statute of limitations comes into play.
Giving creditors 7-10 years to collect is one of the few things that states do to help the winning parties in civil litigation. Most of the rules protect the debtor. But in this one instance, such a long statute of limitations works to the benefit of a creditor willing to be patient.
All Sorts of Things Can Change
There is no shortage of judgment debtors who used the statute of limitations to their own advantage. They stall by any means possible with a hope that once the statute of limitations is reached the creditor will give up and walk away. But a truly judgment-proof debtor is in a different situation. Even if he genuinely wants to pay, he doesn’t have the means to do so. But he might have the means at some point in the future.
Consider some of the possibilities:
1. His Income Increases
Initially, a judgment debtor may have a low-paying job that does not afford sufficient income to make good on a judgment. But perhaps he gets a raise and a promotion or two during several years with the same company. Five years down the road, his income could be sufficient enough to consider garnishment. The debtor might even be willing to enter a voluntary installment plan rather than allow his wages to be garnished.
Another possibility is that the debtor takes a new job that offers regular bonuses besides salary and benefits. Suddenly, he has a non-exempt income through those bonuses. There could be enough to make garnishment a reasonable proposition.
2. He Acquires Non-Exempt Assets
Judgment collectors appreciate assets because they can be leveraged to make payment. A judgment-proof debtor does not have any assets valuable enough to pursue. But again, things could change. A few years down the road, an otherwise judgment-proof debtor could come into an inheritance. He could inherit a family home when his parents die. He could inherit sizeable sums of cash, a group of securities, or even valuable collectibles.
That same debtor could also win the lottery. He could come into possession of a financial trust that was out of reach until he reached a specific age. Literally, the possibilities are endless. Previously judgment-proof debtors can suddenly find themselves the owners of very valuable assets.
There Might Still Be Hope
There was plenty more we could write on this topic. However, we want to leave you with this one thought: the statute of limitations is long enough that there still might be hope on a judgment you have had trouble collecting. Judgment Collectors might be able to help you turn that hope into reality. Contact us today to have us handle your debt collection.