Winning Isn't Enough: Collecting a JudgmentJoe Cline
June 30, 2009 — 822 views
Winning a lawsuit is one thing; collecting on a judgment is another--and it's not as easy as you think.
A legal judgment, by itself, does not guarantee that a creditor can collect the amounts awarded to him. It merely gives a creditor the right to take the necessary steps to make a collection. Many creditors who obtained a favorable judgment are able to collect less than the amount due them or sometimes nothing at all. To `win' the collecting battle, a creditor needs to use creative strategies to speed up the process and collect what he is owed.
- Ask for your money, nicely.
A debtor, like you, has feelings. Harassing him for payment would do you more delay than speed up your collection. Ask for your money, nicely. Stay professional with your mails and calls. Iterate the fact that you are only enforcing your right as awarded by the court. Sometimes being an understanding creditor is all it takes to move a debtor to settle his debts once and for all.
- Tell the debtor the importance of paying now than later.
There are debtors who pay promptly after the court releases an Entry of Judgment; there are some, however, who would delay payment as long as they could. If you happen to encounter this kind of debtor, a face to face meeting with your debtor is the best (and maybe the only) action you could take to make your point across.
Explain to the creditor the compounding interests that would pile atop his previous debts if he would still fail to pay. Illustrate to him by using numbers how much he would lose if he delays payment. Encourage the debtor to solve his own problem by paying you now and not later. Suggest the debtor to borrow from a family, friends or take a cash advance in a credit card to pay the credit off.
You don't have to be on the offensive side during the meeting. The very purpose of your meeting is to remind the debtor that you exist, that you still await his payment, and that you are not a cold, harsh and heartless creditor.
- Keep tabs on your debtor's activities
A new job, winning a lottery, an inheritance money, a new house, a shiny new car - these are the activities of a debtor that a creditor should take note of. These activities and other activities similar to this (money coming in and out of the debtor's pockets) must serve as a signal for a creditor to pick up the phone and call the debtor.
- Settle for less.
Be open to settlement. Talk to the debtor and offer a payment scheme that will be favorable to the two of you. Offer discounts, offer staggered payments, and offer to remove the interest from the judgment.
In the world of collection, sometimes settling for less actually means more. Getting even half of the debt is considered as a successful collection; because most of the times, debts, even with a favorable judgment in hand, stay unpaid and eventually, are forgotten.