What would you say if someone told you that the vast majority of judgments entered by U.S. courts are ultimately never collected? Well, it’s true. Upwards of 80% of all judgments are never paid. That means your company, if it is trying to collect judgments in house, is unlikely to succeed.
Why is that? It’s not just one thing. According to Judgment Collectors, a Salt Lake City collection agency that specializes in judgments, companies attempting to collect in-house have a lot of things working against them.
1. A Lack of Knowledge
The number one thing working against creditors is a lack of knowledge. Judgments are not your typical run-of-the-mill bills. They are the result of court action. As such, enforcement is subject to court procedures, deadlines, etc. Creditors need to follow an entirely different procedure compared to standard bill collection.
Having little to no knowledge of the enforcement process makes for a very steep learning curve. Making matters worse, some companies assign collection to accounts receivables with the expectation that staff bookkeepers can handle it. Those bookkeepers have no idea what to do or how to do it.
2. A Lack of Experience
Above and beyond the legal knowledge, successfully collecting requires a kind of knowledge that only comes with experience. It is the knowledge of how debtors go about avoiding payment. And rest assured that experienced debtors know how to avoid in ways most companies would never imagine.
3. A Lack of Resources
Next up is the lack of resources. In order to pursue outstanding judgments, you need staff you can assign to the task. You need reliable access to public records, real estate records, and other information. If a debtor decides to hide assets and leave town, you need to be able to employ skip tracing.
Organizations like Judgment Collectors have access to all the resources they need. That is because judgments are all they deal with. They are expected to have access to resources that creditors do not have.
4. A Lack of Time
One of the most precious resources in the judgment collection game is time. You need to have time to devote to tracking down debtors and their assets. You need to have time to contact debtors and follow-up. Unfortunately, in-house collection competes with all the other tasks the accounting department must get done.
Some creditors turn to their attorneys for help. But unless an attorney specializes in collections and nothing else, they have other things to do as well. They have other cases to attend to, other court hearings to prepare for, and so on. They probably don’t have a lot of time to devote to your judgment.
5. A Lack of Patience
Finally, many companies do not collect in-house because they lack patience. They go into it expecting to be paid in a couple of months. When those few months turn into several years, they throw up their hands and walk away.
Debtors are smart enough to know that they can wait out creditors. They know that if they just stall long enough, the problem goes away. They will string it out for years on end if that’s what it takes.
So what is your company to do? The best option is to team up with a judgment collection agency as early as possible in the process. Specialized collection agencies have the knowledge, experience, time, etc. to succeed were companies collecting in-house often fail.
Your company is likely to fail in collecting judgments in-house. But there is always the option of turning the judgment over to a specialist.