Did you know that the vast majority of monetary judgements entered in county courts are never collected? Indeed, it is not even close. Seeing the numbers is enough to make one wonder why people even go to court to begin with. Why spend the money to win a judgment only to not collect the court-ordered award?
A 2022 study showed that the failure rate for judgment collection in California is roughly 80%. A previous study conducted by the American Bar Association (ABA) showed similar numbers nationwide. That means only 20% of the judgment collection efforts in this country succeed. And I am guessing that not all those judgments are paid in full. Creditors are probably agreeing to settle for less.
So what’s the problem? It is impossible to nail down one particular issue. We just do not have the data. But as someone who has been researching and writing on judgment collection for many years, I can offer a few likely reasons.
1. Creditors Don’t Understand the System
A monetary judgment is not just another bill to be collected. It is actually a court decision that entitles the creditor to a monetary award. But as is the case with everything connected to the court system, judgments can be incredibly complex.
Plenty of creditors fail in their collection efforts because they do not understand the system they are working in. They do not understand how to apply the rules to their advantage. They go into collections with a haphazard approach that leaves them wandering aimlessly across the collection landscape, never grabbing hold of what is legally due to them.
2. Creditors Don’t Know Their Options
In addition to not understanding the system, creditors often do not know their options for collection. They are unfamiliar with garnishment, judgment liens, writs of seizure, and so forth. But there is more.
Debtors are very adept at avoidance. Oftentimes they are encouraged by their attorneys to avoid paying for as long as possible. On the other hand, creditors are unfamiliar with tools like property searches and skip tracing. They do not know how to overcome avoidance tactics, so they simply give up.
3. They Try to Collect on Their Own
The first two points can be highly frustrating to people tasked with collection efforts. Whether that means a sole proprietor trying to collect an outstanding bill or members of the company accounting department who have been thrust into debt collection, trying to collect in-house is the worst thing a judgment creditor could do.
Where most creditors do not understand the system or their options, a specialized collection agency like Salt Lake City’s Judgment Collectors knows judgments inside and out. If more creditors would bring collection agencies in on day one, I would be willing to bet that success rates would jump dramatically.
4. They Aren’t Playing the Long Game
Finally, judgment collection is a long game. Any creditor who expects to get paid within 90 days of a judgment being entered isn’t being realistic. Collection rarely succeeds that quickly. In most cases, collection takes years.
Too many creditors go into the game thinking collection will be short and sweet. By the time their efforts are dragging into the third or fourth year, they are ready to write off the losses and move on. Guess what? That is exactly what debtors are betting on.
Such abysmal success rates are what they are. But things don’t have to be this way. If creditors knew what they were dealing with and were willing to bring in collection agencies early on, they would regain the upper hand. They would succeed more often than not.