Debt collectors face the same common judgment collection issues in Commerce as in other parts of the country.
Creditors know that judgment collection issues in Commerce are common. But this is similar to other parts of the country whenever you have someone that does not pay back his or her debts. It’s also very common when you have a debtor who allows the debt collection process to go all the way through the legal court system. But even after a judge enters judgment in favor of the creditor, collectors still face significant hurdles in getting their money.
Below are three of the more common challenges they may face:
#1: Finding the Money
After obtaining the judgment, the collector will want to get the money. But they can’t collect the money unless they know where it is. So the first potential collection issue is finding the money or assets the debtor can use to pay off its judgment debt.
In most states, the losing party in a civil court case must provide to the court or give the winning party a list of its assets and debts to aid in the collection of the judgment. The exact process can vary but usually includes completion of a disclosure statement or responding to post-judgment discovery requests from the winning party. These discovery requests can consist of depositions, requests for production of documents and interrogatories, just like during the pre-trial discovery process. In either situation, the debtor must provide the information or face punishments from the court.
#2: Getting the Money
Once the judgment collector locates the money and property, it can take steps to collect it. There are several avenues available for money collection. The first is a levy, which allows the judgment collector to physically take the property then sell it. The proceeds then go to satisfy the judgment debt.
Second is the lien. This is a legal notice that informs the public that a particular piece of property, such as real estate or a vehicle, is subject to a debt. This tells potential buyers that they shouldn’t purchase the property because if they do, they can lose it and possibly not get their money back. A lien is a quick and easy way for a judgment collector to effectively “freeze” a debtor’s assets.
Third, there is garnishment, where the money comes directly out of the debtor’s paycheck or bank account. To establish garnishment, the judgment collector must follow the necessary legal procedures and provide proper documentation to the debtor’s employer or financial institution. From there, the employer will take money from each paycheck or the bank will take money from the debtor’s account and give it to the judgment collector.
Bankruptcy is a serious risk to collection efforts because, in many instances, it can completely wipe out the judgment against the debtor. There are some types of debts that bankruptcy cannot clear and liens that can remain after bankruptcy. Examples of obligations that can continue after bankruptcy include child support and certain personal injury awards. Therefore, it will take a very savvy debtor collector to navigate the legal process to have his or her judgment survive bankruptcy.