It can be very frustrating to win a civil judgment but then struggle to collect from the debtor. Even the best collection efforts can be thwarted by debtors who know how to game the system. Unfortunately, it is not uncommon for frustrated creditors to turn to collection agencies, only to discover that the agencies want nothing to do with their judgments.
General collection agencies that do not specialize in judgments are very hesitant to take on such cases even under the best of circumstances. Specialized collection agencies are more willing, but even they will not take every case. There are some judgments they just don’t want to touch.
Judgment Collectability Is Always a Concern
According to debt collection specialists Judgment Collectors, the fact that a judgment has been rendered doesn’t mean the associated monetary award is actually collectible. For instance, consider what the legal industry refers to as a judgment-proof debtor. Although this debtor has lost a civil court case, collecting from them will be virtually impossible.
A judgment-proof debtor simply doesn’t have the financial resources to pay. They have no assets of any real value. There are no reasonable prospects for the future, either. A collection agency is essentially looking at a stone from which blood cannot be drawn.
Before agreeing to take on a judgment case, a collection agency will determine the debt’s collectability. If there is a good chance that collection efforts will succeed, the agency will be more willing to move forward. Otherwise, they won’t touch that debt.
Older Debts Are Harder to Collect
A collection agency also needs to consider the age of the debt. A judgment rendered within the last month is fresh. Getting started on it right away increases the chances of success. It also increases the likelihood that the collection agency will walk away with a fairly substantial collection.
On the other hand, a judgment rendered years ago will prove much harder to collect. Not only has the debtor been given a substantial head start, but there may also be a statute of limitations looming. Collection agencies must think long and hard before taking older cases.
As a side note, statutes of limitation do not necessarily have to get in the way. A promising debt with valuable assets behind it could justify renewing a judgment prior to its expiration. Renewal gives the agency a clean slate to start again.
Assets Are an Important Factor
Sometimes a collection agency will not touch a judgment because the debtor doesn’t have any significant assets. Why does this matter? Because payment plans rarely work out well. Wage and bank account garnishment are possibilities for extracting payment, but they don’t produce very much money in the short term. So when all else fails, collection agencies turn to assets that can be seized and sold.
States differ in the types of assets they make available for seizure. In some states, personal possessions can be seized while real property cannot. In other states, real property is subject to homestead exemptions. A collection agency needs to know what kinds of assets it is dealing with before it can render a decision.
Whether or not an agency takes a case really boils down to two things: the chances of success and the maximum amount the agency is likely to collect. If it is not worth an agency’s time or effort to go after a particular debtor, the case will be refused. Then it’s up to the creditor to either pursue collection through other means or take its losses and walk away. That is the way the game is played.
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