Winning a civil judgment that includes a monetary award sets the stage for what could be a long and arduous collection process. Rarely does a defendant come to court with checkbook in hand, ready to make full payment as soon as the gavel falls. A typical defendant, also known as a judgment debtor, will go to great lengths to avoid paying.
As for judgment creditors, they have access to multiple collection strategies. In addition, the experts at Salt Lake City’s Judgment Collectors explain that state law determines which strategies are allowed and which are not. That partially explains why each case needs to be analyzed on its own merits.
Who Manages Collection Matters
Before getting to actual collection strategies, it is important to know who manages collection matters. Judgment creditors have three options: they can try to collect the debt themselves, they can leave collections to their attorneys, or they can hire collection agencies that specialize in judgments.
Creditors rarely succeed on their own. Leaving collection to an attorney is a better option, but attorneys have other things to do. Therefore, the best choice is ultimately bringing in a collection agency. Collecting bad debts is what they do. They are the experts.
Top 4 Most Common Collection Strategies
Regardless of who actually does the work, it’s important that the right strategies be chosen. Knowing how to work with those strategies within the confines of the law doesn’t hurt, either. With that said, here are the top four most common judgment collection strategies:
1. Offering a Voluntary Payment Plan
The first strategy is arguably the easiest and least aggressive: offering a voluntary payment plan. A judgment creditor or its representative proposes a plan to the debtor or his attorney. The debtor accepts the plan or counters with the plan of his own. Attorneys for both sides can go back and forth until they come up with something everyone can agree on.
A voluntary payment plan takes the pressure off the debtor as long as he makes scheduled payments. It also mitigates the need for any further collection efforts by the creditor.
2. Wage and Bank Account Garnishment
In the event the two parties cannot work out an acceptable payment plan, there are other options. The first among them is garnishment. Judgment creditors in most states can garnish wages, bank accounts, or both.
Wage garnishment involves seizing a certain amount of money from each paycheck and putting it toward debt retirement. Garnishing a bank account involves taking a certain portion of the money and forwarding it to the creditor. Garnishment’s main drawback is speed. It can take years to pay off a sizable debt via garnishment alone.
3. Property Liens
A more aggressive strategy is to place judgment liens on a debtor’s property. A judgment lien is similar to a construction lien or the lien a bank would put on a home after writing a mortgage. The lien prevents the debtor from selling the affected property without paying his debt. Should he have to sell, the sale proceeds go toward paying his debts. He keeps anything left over.
4. Asset Seizure
The final collection strategy is arguably the most aggressive: asset seizure. The creditor goes to court to obtain a writ of seizure against a particular asset – say a vacation property, for example. The asset is seized and sold by the county sheriff with the proceeds going to retire the debt.
Judgment creditors and their representatives go about collecting judgments in different ways. There are enough strategies to provide adequate choices. Still, collecting successfully is never guaranteed.
