Today’s guest blog was contributed by Lisa H. Haster, Esq., Of Counsel/Marketing Director for Gurstel Law Firm P.A. Over a series of 4 blogs, she is walking our readers through the processes that can be expected before, during and after retaining a collections attorney to assist in recovery of delinquent accounts. The series includes:
- When to engage an attorney and why?
- What exactly is a judgment and how does it benefit me?
- The process a file undergoes when it is placed with a collections attorney
- Recoveries that are available to a business once it obtains a judgment.
PART 2 of the series What to Expect when Retaining a Collection Attorney to Assist in Recovery of Delinquent Accounts.
What Is a Judgment?
Obtaining a judgment against a non-paying customer entitles your business to legal rights and more money than had you not done so. This is important for you to know, because obtaining a judgment can drive repayment of the debt.
A judgment is a court order determining that you are entitled to repayment, and ordering your customer to pay you. Once a judgment is obtained, then you, as the judgment creditor, have the legal right to garnish bank accounts, go after wages, and put liens on property.
These legal mechanisms are intended to entice the non-paying customer (the “debtor”) to voluntarily pay you. In the event that the debtor fails to pay voluntarily, you still have legal recourse.
Let’s say ABC Biz delivers products to Customer Biz and Customer Biz fails to pay the $7,000.00 it owes ABC Biz for these products. ABC Biz hires a Collection Attorney and obtains a judgment against Customer Biz for $7,000.00. Collection Attorney then puts a lien on Customer Biz’s equipment and goes to its retail store and does a “till-tap,” literally removing all cash from the registers! As a result, Collection Attorney then receives a voluntary check from Customer Biz for the remaining balance due and Collection Attorney, in turn, remits the payment to ABC Biz, who is made whole.
What to Do Next?
You now understand exactly what a judgment is and realize that it can benefit your business’s efforts to recover on delinquent accounts. Next, we’re going to address a common problem our office sees far too often. Some businesses have a judgment but don’t know what to do next.
We see it all of the time. A business owner or credit manager goes to small claims court and obtains a judgment against a customer with a past due account. That’s all fine and dandy, but obtaining the judgment is by far the easiest part of the process. It’s just the first of many procedural steps a business needs to take in order to recover on a delinquent account.
We have found clients who are sitting on hundreds of dormant judgments. Those judgments could be turned over to a collection agency that effectively works in tandem with a collections law firm, recovering the client’s money while they work, sleep, and play.
Our office frequently represents other law firms who have obtained judgments for non-paying clients or on behalf of their clients, but who don’t have the knowledge base or interest to take additional steps toward recovering on the judgment.
Judgment execution (the process of getting paid on the judgment) can be hugely complex. It is governed by federal laws, state laws and in some cases even local rules of court. If a party undertakes an execution of the judgment but fails to follow the laws, they risk exposure to liability for penalties that often exceed the amount of the judgment they are seeking to collect.
The process of executing on the judgment varies from state to state and can even vary from county to county. In order to legally, efficiently and effectively execute the judgment, the practitioner must have a working knowledge of the procedure. Reputable collection agencies and collection law firms are familiar with the process and the rules.
Our office, for example, works in tandem with collection agencies or directly with creditors to obtain judgments and execute on judgments throughout the U.S. Our partner collection agencies, attorneys and support staff have fantastic rapport with the courts and their staff.
Post-Judgment Execution Tasks
By way of example, our flagship office is located outside Minneapolis, Minnesota. The following is a list of tasks that we can expect to complete before executing on a Minnesota judgment:
- Perform a UCC (Uniform Commercial Code) check
- Confirm the debtor is still in business
- Do a bankruptcy search
- Do a property/asset search
- Docket any small claims judgments to district court
- In case of small claims judgments, know the “stay” period and wait for it to pass
- Obtain a writ of execution
- Locate agents of the business
- Serve post-judgment discovery
- Commence a wage garnishment
- Commence a third party levy
- File a lien
- Conduct a post-judgment deposition
The list is not exhaustive. It is what can be expected in an UNCONTESTED post-judgment action. Some of the tasks mentioned above are deadline-oriented, while others are not. If the debtor re-opens the matter or applies for a request to vacate the judgment, or appeals to a higher level court, the procedural process is much more complex.
Leave Execution to the Professionals
As you can see, post-judgment execution statutes require a significant knowledge base for businesses that want to execute on a judgment. The best advice that can be given is that you leave collections to the professionals, who take compliance seriously and are much less likely to place your business at risk of exposure to liability.
Now you understand what a judgment is and how it can benefit your business. You also recognize the complexity of the post-judgment execution process. You realize that you need to hand off any judgments your business has taken and leave the execution up to an experienced collection agency or collection attorney.
Next in Our Series
For additional information on collecting delinquent accounts, grab a copy of our free eReport: What Most Businesses don’t know about the Recourse that’s available to them when a Customer Refuses to Pay. https://lisah.clickfunnels.com/gurstel-law-firm-p-agnv6iis5 and watch for Part 3 of this series where we’ll explore the process a file undergoes when it is placed with a collection attorney.
Lisa A. Haster, Esq.
- Principal-Metropolitan Law Group P.A.
- Of Counsel/Marketing Director-Gurstel Law Firm P.A.
- (612) 524-9414
Categories: business debt, collection law settlements, Commercial collections, Compliance, Debt Collection, garnishment, judgment to collect debt, Legal Judgment, NL Insider, Post-judgment execution tasks