Taking an individual or another company to court to get some sort of debt relief is all about winning a judgment. In essence, a judgment is a court decision recognizing the validity of the debt and the debtor’s responsibility to pay it. But what happens after the gavel falls? How does a successful creditor actually get paid?
One of the more unfortunate aspects of civil court is that courts rarely get involved in enforcement efforts. Enforcement is left to creditors in their representatives, according to Salt Lake City’s Judgment Collectors, a debt collection agency that specializes in judgment collection in Utah and other states.
Below are the five choices creditors have after winning judgments. Bear in mind that each state regulates civil court and subsequent judgments differently.
1. Leave Collection to the Attorney
Judgment Collectors says that it is not unusual for creditors to leave collection to the same attorneys that represented them during the civil trial. Doing so isn’t a bad idea if a creditor’s attorney has judgment collection experience. A lack of such experience should motivate a creditor to think twice about utilizing its attorney.
The one downside to leaving collection to an attorney is the potential cost of doing so. If the attorney charges by the hour, collection efforts could get awfully expensive – especially if it takes years to secure payment.
2. Hire a General Debt Collection Agency
Debt collection agencies come in a variety of flavors, so to speak. A general debt collection agency handles every-day debts like utility bills, medical bills, unpaid rent, etc. They generally purchase debts from creditors for pennies on the dollar. Suffice it to say that a judgment creditor probably won’t get face value by selling judgments to in general collection agency.
3. Hire a Judgment Collection Agency
There are debt collection agencies that specialize in judgment collection services. The previously mentioned Judgment Collectors is one such firm. They tend to be a safer bet compared to general collection agencies because they have specialized skills, knowledge, and experience.
Note that some judgment collection agencies purchase judgments in the same way general agencies purchased debts. But others work on consignment. Under a consignment arrangement, a collection agency provides a service in exchange for a fee. That fee is only paid if the collection agency succeeds. The arrangement is very similar to arrangements offered by personal injury attorneys who only get paid if they win their cases.
4. Keep Collection In-House
The fourth option is for the creditor to attempt collection on its own. Keeping collection in-house offers the opportunity to collect the full value of the judgment in question. But bear in mind that a creditor pays all the expenses that come with collecting. Those expenses include court costs, research and investigatory costs, miscellaneous expenses, etc.
In-house collections can be difficult when creditors don’t know the law. And because collecting is a time-consuming process, it could take years for a company to get its money.
5. Walk Away Completely
The final option is to simply walk away from the judgment with a moral victory alone. Doing so is contradictory to the whole reason for going to court in the first place, but a lot of creditors walk away after failing at in-house collection. They no longer want the hassle, so they just give up.
One thing all five options have in common is the responsibility laid at the creditor’s feet. Courts do not enforce judgments on a creditor’s behalf. Enforcement is solely the creditor’s responsibility. Perhaps that’s why so many judgments remain forever uncollected. Getting paid is just too difficult.