Protecting Your Business

As A Creditor, What Can We Do If We Can No Longer Locate A Debtor Who Is Ordered To Pay A Judgment?

We have experienced and thorough asset investigators that are very good at locating hard-to-find debtors. This is something that should be done prior to receiving a judgment. In today’s digital world, most debtors leave tracks of where they’re living, so a creditor shouldn’t give up simply because they haven’t been able to locate a debtor for a period of time. With diligence and the right tools, we’ve been able to collect from many hard-to-find debtors.

If a judgment has already been obtained, but the debtor is not paying and cannot be located using traditional methods, we recommend the use of an asset investigator to try and locate the debtor and his/her/its debtor’s assets. In these types of cases, we record an abstract of judgment and a notice of judgment lien. An abstract of judgment liens any real property that the debtor owns, and a notice of judgment liens personal property owned by the debtor. Even if the debtor doesn’t have real property or substantial personal property when the liens were recorded, the liens also apply to property acquired in the future by the debtor. Once these liens are in effect, a debtor will generally be required to satisfy them when they attempt to sell or refinance their property.

If the balance owed warrants it, it’s usually a good idea to file a lawsuit, secure a judgment and record liens. Judgments can be valid for many decades, and at some point, the debtor should be located and the creditor paid what they are owed.

Should We Just Use A Collection Agency To Collect On A Judgment Or Debt Owed To Us?

Collection agencies are certainly an option, but they’re limited in what they can do. Generally, a collection agency can only write demand letters and make phone calls to a debtor. An experienced collections attorney can do everything that a collection agency can do, but they can also file a lawsuit. The lawsuit will provide significant additional leverage against the debtor by threatening a seizure of their assets. In my experience, communications from a law firm are taken more seriously than those from a collection agency. Most debtors are savvy enough to know that a collection agency is limited in what they can do. Additionally, the fees that we charge are similar to what a collection agency charges, but since we can provide additional services, in our opinion it makes more sense to hire an attorney. Generally, the only situation where we recommend an agency is if a client has multiple small accounts that are less than $5,000.

If A Judgment Is A Court Order, Why Can’t The Court Just Automatically Make The Debtor Pay Us?

Hundreds of years ago, debtors were actually imprisoned for non-payment of debts until they or their families paid up; however, it doesn’t work that way anymore. In California, the enforcement of judgments law provides creditors with many different tools for collecting judgments. The only time someone may possibly be threatened with prison or held in contempt is if they fail to obey a court order, but failing to pay a judgment by itself is not grounds for that.

If we were to serve a debtor with an order to appear in court for a post-judgment examination and they fail to do so, then the court can issue a warrant for their arrest. Oftentimes, debtors don’t appear because they don’t see the importance of appearing or just choose to ignore the order. While failing to appear could result in a finding of contempt and a finding of contempt could result in prison time, this rarely happens. With that said, the threat of a contempt order/arrest warrant is oftentimes enough to get a debtor to speak with us and agree to a payment plan.

Ultimately, the courts can’t be relied upon to collect for a creditor; the creditor has to go out and do it themselves, which is why it is so important to have an experienced attorney who can ensure the greatest likelihood of success. Most people don’t have knowledge of the enforcement of judgments law and don’t know which tools are available to them. It’s a difficult process to navigate, and frankly, there are even attorneys who are very good at what they do but do not have experience in collecting judgments. It’s a unique and important skill to be able to collect on a judgment.

For more information on Commercial Collections Attorneys, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling Matthews Law Firm, Inc., at 714-701-8970 today.