How much do you know about debt collection and judgments? Are you among the many people who are confused by all the legalities? It goes without saying that debt collection is a complicated matter. Most people know very little about it, including the fact that collections and judgments are two separate things.
While unsuccessful collection efforts can ultimately lead to a judgment, and judgments can go to collection, they are still two different things. Collection is a process. A judgment is a court decision. If you can grasp the differences between the two, you can probably understand how collections can lead to judgments and judgments can be sent to collection.
Sending Unpaid Bills to Collection
Hopefully, you have never been subject to official collection proceedings. If you have, you know that collection was initiated against you only because you didn’t pay a particular bill. Maybe it was a utility bill. Perhaps it was your monthly rent. Whatever the case, the person or organization to whom you owed the money sent the unpaid bill to a collection agency. The agency took on the task of getting payment from you.
This sort of scenario is known as general collection. It involves all sorts of debts. Companies normally don’t send unpaid bills to collection until they have made every reasonable effort to collect in-house. To them, collection is a last resort option. Why? Because they lose money on the deal.
Collection agencies either work on consignment or buy debts from creditors outright. In either case, the collection agency must be paid. And who pays? The creditor. By sending a bill to collection, a creditor is acknowledging that it will not get the full amount of whatever ends up being paid.
Collecting Civil Judgments
Moving on to judgments, they are essentially decisions rendered in civil court. Let us use the example of a landlord taking a former tenant court over unpaid rent. If the landlord wins his case, a judgment is entered against the tenant. That judgment is likely to include a monetary award covering the unpaid rent, the landlord’s legal expenses, and any other expenses incurred by the landlord in their attempt to collect.
The landlord can try to collect the monetary award on by themself. In a perfect world, the tenant would realize he has lost and willingly make payment arrangements. But this isn’t a perfect world, so the landlord has two other options: turn collection over to their attorney or hire a debt collection agency that specializes in judgments.
Judgment Collectors is one such collection agency. Based in Salt Lake City, UT, the firm collects judgments on behalf of clients in eleven states. They say hiring a collection agency is generally a creditor’s best and most effective option, especially when debtors do not cooperate.
From Collection to Judgment
There are times when a debt goes from collection to judgment. It can happen when a collection agency buys a debt, tries to collect, and ultimately fails. The collection agency may take the debtor to court in hopes of getting a judgment. But why?
A judgment gives the collection agency access to a range of tools it would otherwise not have access to. For example, a collection agency cannot garnish a debtor’s wages or bank account without a judgment. With a judgment, more things are on the table.
Collection and judgments are two separate things. They often lead to the same and result, though. Collections can sometimes lead to judgments while judgments can be sent to collection agencies. Despite being different entities, collection and judgments are both part of a much larger legal and financial game.