Winning a judgment against another party could also mean winning a financial award. Enforcement of such a judgment would boil down to collecting. Unfortunately, collecting is often harder than actually winning the judgment. There are a number of challenges that make collection exceedingly difficult for creditors who don’t understand the system.
Note that the winning parties in a money judgment case are known as judgment creditors. The losers are judgment debtors. The creditor is collecting the debt while the debtor is expected to pay it. And if judgment collection were just that simple, there would be no point for this post. But it’s not.
Judgment creditors face a headwind of challenges that must be overcome. Here are just some of the most challenging things they face:
1. A Lack of Information
Judgment creditors are largely responsible for handling collection efforts. A court only gets involved in collection when the creditor returns for a new order. Examples include obtaining a writ of garnishment, obtaining a writ of execution, or requesting a deposition.
Because creditors handle collection, they rely heavily on accurate and complete information. They need to know things like:
- Where the debtor Iives
- Where the debtor works
- How much the debtor makes
- The types of assets the debtor owns
It is not unusual for debtors to provide incomplete or inaccurate information. By not telling ‘the whole truth and nothing but the truth’, debtors make life much harder on creditors. A successful creditor needs to know how to find information debtors do not offer willingly.
2. A Lack of Cooperation
Providing true and complete information is just one thing expected from judgment debtors. They are also expected to make every effort to pay, even if that means voluntarily entering a monthly installment plan. But the truth is that debtors don’t always cooperate. In many cases, they do not.
This is an enormous challenge for judgment creditors. A lack of cooperation just makes collection that much harder. And sometimes, the lack of cooperation is on direct advice from an attorney. Then a creditor is not only up against a debtor unwilling to pay, he is also up against an attorney advising that individual in ways to avoid paying.
3. A Lack of Assets
Next up is a lack of assets. Imagine you are a judgment creditor. You are hoping the debtor has enough income to pay the judgment in a couple of installments. But what if he doesn’t? You might be interested in assets you can leverage for payment, assets like real estate and vehicles. But what if your debtor does not own any of them either?
A lack of assets equals a lack of leverage. A debtor who knows he legitimately has no means to pay has plenty of incentive to not enter a voluntary payment plan. He has nothing to lose because he has no assets at risk. By the way, Utah-based Judgment Collectors says this type of debtor is known in the industry as ‘judgment-proof’. Collecting from a judgment-proof debtor is nearly impossible.
4. Legal Restraint
The final challenge on this list is legal restraint. Every state has laws in place to protect debtors. Unfortunately, the laws restrain creditors from certain types of activities. What is meant to protect debtors ultimately hurts creditors. But that’s the way it is.
Collecting money judgments isn’t easy. That’s why firms like Judgment Collectors exist. There are far too many challenges for most judgment creditors to attempt collecting on their own. They need the help of professionals who understand the system and how to work it to a creditor’s advantage.
