Winning a money judgment against another party creates a legally recognized debt. The winning party, known as the judgment creditor, now has the right to collect that debt from the losing party, also known as the judgment debtor. Here’s the big question: should a judgment creditor go it alone or enlist the help of a collection agency?
Perhaps you are trying to answer the question for yourself. You have won a judgment and are now planning to collect in-house. But maybe working with a collection agency is better. Perhaps a collection agency could do a better job of ensuring that you get paid the full amount in a reasonable amount of time.
Why You Might Choose In-House Collection
You would not be the first judgment creditor to opt for in-house collection. The primary reason for collecting in-house is to save money. Turning the task over to a collection agency or an attorney means paying out a certain amount of what is collected for services rendered.
Collection agencies are a bit different in that they do not tend to charge hourly rates like attorneys do. Instead, they get paid through one of two options:
- Purchase – They purchase money judgments outright in the hopes of collecting a lot more than they pay the judgment creditor. The difference is in their profit.
- Consignment – Rather than purchasing judgments, consignment agencies work on behalf of their clients. They charge a fee based on a percentage of what they collect.
With either model, judgment creditors can easily spend a lot on collection services. But they also get quite a bit for their money, especially when they choose the consignment model.
The Benefits of Outsourcing Collection
Utah-based Judgment Collectors specialize in collecting money judgments on consignment. They operate in nearly a dozen states. Their pitch to clients is pretty simple: outsourcing judgment collection means leaving the entire thing in the hands of professionals who collect outstanding debts for a living. This translates into some pretty attractive benefits:
1. Zero Collection Expenses
A consignment-based collection agency covers all its own costs during collection. The judgment creditor doesn’t spend another dime on filing fees, postage, database access, or anything else. They only pay a fee if and when the agency collects.
2. All Legal Issues Are Handled
The legal complexities of collecting an outstanding judgment from an uncooperative debtor can be dizzying to someone who doesn’t understand the system. Working with a collection agency means their staff handles all legal issues. No more headaches for the creditor.
3. Limited Time Commitment
Yet another benefit of outsourcing collection is the limited time commitment that comes with it. A creditor may have to spend a little time with the agency to get things going. But after that, there is nothing left to do but wait to get paid. The creditor can devote precious time to more important things.
4. A Larger Collection Amount
Because collection agencies are familiar with all available collection tools, they are better equipped to know how to pursue a debtor in the most effective way. In the end, they stand a better chance of collecting a higher amount than a creditor would get by keeping things in-house.
As a judgment creditor, you have every right to attempt to recover what you are owed through in-house collection efforts. Should you choose to go that way, best of luck to you. But you also have the right to engage a collection agency on your behalf. Give it some thought. There are definite advantages to outsourcing the task to an experienced collection agency.