Winning a lawsuit against a debtor may result in a judgment being entered against that individual. A judgment represents a creditor’s legal right to collect payment. However, collecting is not always easy. Creditors can spend years trying to collect only to turn the debts over to a specialized judgment collection agency.

Have you ever wondered what happens when a company hires such an agency? In a nutshell, the collection agency assumes responsibility for collecting on the debt. The creditor benefits by passing off that responsibility to a third party. Time, energy, and financial resources can then be put toward more important things.

Two Collection Models

The one thing most judgment collection agencies have in common is a willingness to forgo payment until collection is made. There are two models under which this occurs. The first model involves purchasing a judgment outright. Remember that judgments are legal instruments that can be bought and sold like securities.

Under this model, purchasing a judgment makes the collection agency the rightful owner of the instrument. The agency’s client gets paid and that’s it. Now it is the agency’s responsibility to go out and collect. A failure to do so would result in the agency not being paid.

The second model is a contingency model. Here, the judgment is not purchased. Instead, the collection agency agrees to assume responsibility of collection along with all of its associated costs. The client pays nothing until successful recovery is realized. At that point, the collection agency holds back an agreed portion of the collected amount as its fee.

Again, the key to both models is that the agency does not get paid until collection is made. This eliminates risk for the client while motivating the collection agency to do the best job it can.

Research, Investigation, and Collection

Judgment collectors work on three fronts. The first front is research. They look into the judgment in question to fully understand the individual or organization from which they are attempting to collect. They might also need to research specific details of the judgment.

The second front is investigation. This involves learning more about the debtor’s assets, income, etc. It may become necessary to go after those assets in the event the debtor does not voluntarily pay up.

Last but not least is the actual collection of the debt. Under ideal circumstances, a debtor would voluntarily make payment arrangements upon first contact. Unfortunately, that’s not the way it always goes. Some debtors go to great lengths to avoid being found. Others claim they do not have the resources to make payment. Still others refuse to cooperate after being found.

Judgment Collectors Have Legal Recourse

Regardless of how things go on all three fronts, judgment collectors do have legal recourse. For example, they can request a post-judgment discovery hearing during the research phase in order to get the information they need to collect. Such information might include the debtor’s employment information.

Judgment collectors can rely on tools like wage garnishment and property liens to force payment from uncooperative debtors. According to Utah-based Judgment Collectors, these tools are rooted in the fact that judgments are the result of litigation.

A judgment is entered against an individual or organization as the result of a lawsuit. This affords collection agencies more tools for collection, tools that might not be available to them if they were collecting standard debts.

In the end, companies hire judgment collection agencies to collect what they have been unsuccessful in collecting themselves. Given the nature of judgment collection, hiring a third-party specialist is probably the right way to go.