Nearly every business day, judgments are entered in courts all across the country. A fair share of those judgments is sought by small companies trying to collect outstanding debts from deadbeat customers. If you are the owner of one of those companies, winning a judgment is just the start of the long and arduous process of getting paid.
Perhaps you will be one of the lucky ones who gets paid with the check on the way out. But don’t count on it. The vast majority of judgments never get collected. And among those that do, many take years to settle. The question is this: who is going to put the time and effort into collecting? Below are your three choices. As you read, bear in mind that the court will not get involved unless you need some sort of writ to proceed. But even at that, the court’s involvement will be limited to granting you said writ.
The first option is for you and your staff to handle collection. Perhaps you make contact with the debtor every few weeks to inquire about payment. Maybe you are lucky enough to arrange an installment plan in which the debtor pays so much per month until the debt is paid off.
It’s a safe bet that most small companies going to civil court for the first-time plan to collect any judgment in-house. Business owners are content to let the accounting department handle collections. What they don’t realize is that debtors uncooperative enough to be sued usually aren’t going to comply so easily with judgments, either.
This is why so many small companies struggle to collect judgments. They do not truly know what they are up against until they are in the thick of things. If you want to avoid getting mired in ongoing collection efforts, consider one of your other two options.
Some companies don’t even bother trying to collect in-house. They retain the same attorneys that represented them in court to handle collection as well. Attorneys make contact and work out payment terms. If necessary, they go back to court to seek writs of execution and garnishment.
Turning collection over to your attorney is not a bad option. However, unless collection is something your attorney specializes in, you may not get the best possible service. Your attorney will likely prioritize other cases over collection with the understanding that they will make more money doing so. So while working with an attorney is more desirable than collecting in-house, the third option is probably the best of all.
Your third option is to turn the debt over to a collection agency. However, going with a general collection agency is a bad idea. You are better off with an agency that specializes exclusively in judgments. Salt Lake City’s Judgment Collectors is one such agency. Collecting judgments is all they do.
The advantage of turning to a collection agency is aligning with a company that will do all the work for you. You can turn a judgment over and not worry about it again. There is one thing to know, however: some collection agencies purchase judgments for pennies on the dollar while others work on consignment. The consignment model offers a bigger potential payout.
If you are thinking about civil court as a means to go after deadbeat customers, consider how you will collect should you actually win. Whatever you decide could very well determine whether going to court is worthwhile.