As a small business owner, I understand the temptation of heading to civil court when invoices go unpaid for a length of time. But one thing I’ve learned over the years is that, when it comes to debt collection lawsuits, there is more to it than merely winning.
Winning a debt collection lawsuit establishes a court record verifying the legitimacy of a debt and the debtor’s obligation to pay it. It also grants access to certain collection tools that are not available to creditors without a judgment. So yes, civil court can be a very good tool for collecting from deadbeats. Yet winning does not guarantee payment.
After Winning Comes Enforcement
Sentencing follows conviction in a criminal court. But civil court works differently. Rather than sentencing, enforcement follows the court’s judgment. And in a debt collection case, enforcement equals collection. The court’s decision is enforced by collecting the monetary award in question.
The most important thing to note here is that the court’s role in enforcement is limited. It’s up to the judgment creditor and his attorney to figure out how to proceed. The court only gets involved when new orders are required – like garnishment orders and writs of execution.
When Debtors Cooperate
The best a judgment creditor can hope for is a cooperative debtor who immediately takes responsibility and finds a way to pay. Maybe the debtor can pay the entire bill with one lump sum. Maybe he asks for a reasonable payment plan that fits into his budget. The debtor might even offer to pay cash right away, in exchange for the creditor accepting less than the full amount.
When Debtors Don’t Cooperate
Unfortunately, cooperative debtors are not the norm. Most are uncooperative for one reason or another. Regardless of the debtor’s motivation, being uncooperative can lead to a judgment collection agency getting involved. One such agency is Utah-based Judgment Collectors.
The Judgment Collectors team says uncooperative debtors are often not forthcoming about their income and assets. Some might leave out vital information while others attempt to hide assets by transferring ownership to family members. Still others simply pack up and move away.
Debt Collection Lawsuits Continue Unabated
Most of what you have read thus far probably wouldn’t be a big deal to so many people if debt collection lawsuits were rare. But they aren’t. The lawsuits are fairly common and, according to Pew research, growing more common by the year.
Research done in 2021 revealed that 11% of the civil cases filed in 1993 were debt collection cases. That number jumped to 25% in 2013. It had risen to 42% by 2021. Pew’s research also points to a small number of states in which more than half the civil cases were debt collection cases.
Granted, some of the increase noted in 2021 was a direct result of the financial hardships caused by COVID. Still, that does not change the fact that debt collection continues to be a big problem in this country.
Civil Court May Not Be the Answer
Based on what I know about civil court and debt collection lawsuits, I think it reasonable to say that going to court may not always be the right answer. Again, winning a debt collection lawsuit does not guarantee payment.
If the amount of money owed does not justify the time and expense of civil litigation and collection, it might be better for a creditor to accept whatever they can get in monthly payments. That’s just the reality of debt collection. On the other hand, what good is winning in judgment if you can’t collect?
