Judgments can be tricky, depending on the jurisdiction, but that doesn’t mean they should be ignored, according to a pair of executives who spoke on a webinar recently about the topic.
The speakers were Jay Coulter, a vice president at Resurgent Capital Services, and Brian Winn from the Winn Law Group. The webinar was sponsored by InvestiNet. A copy of the webinar recording can be accessed here.
Judgments are legal documents that entitle the holder to seize assets to satisfy an unpaid debt. The most common assets that are seized are: funds from bank accounts, liens placed on property, and garnisheed wages.
To locate the assets, there is usually some investigatory work that needs to be done, whether it is finding out where the individual is employed so a garnishment notice can be sent, or locating where the individuals’ bank accounts are held. Once an asset is identified, however, different states have different regulations on how much can be seized. Checking the jurisdictional requirements should be a core component of ensuring a compliant process.
The objective should be to “get the most money while spending the least amount of money,” Coulter said during the webinar. Using products like credit report triggers, which supply notifications when a new loan application is submitted by the individual, can help with asset identification and locating an individual.
Judgments are also useful tools to get in touch with individuals. Winn said that an individual who receives a letter pre-judgement is less likely to respond to it than when he receives a letter post-judgment. The individual’s interest in settling the matter increases once a judgment has been entered.
Looking for employment information is usually more successful than looking for bank accounts, Winn said, because individuals can switch bank accounts fairly easily. Most people are not willing to switch jobs as quickly as they are to switch bank accounts.
Before collecting on any judgment, Coulter had some steps that companies should follow:
- Make sure the judgment is valid. Most judgments are good for 10 years, but may be renewed.
- Make sure the balance is correct
- Implement a process to make sure the judgment is valid and collectible
“The first year may not be the best time to collect on a judgment,” Winn said. “But in years two to five, when the customers has had a chance to re-establish themselves, that may be the best time.”
