As a business owner, you have taken a deadbeat customer to court for the very first time. You have won your case. Yet your attorney tells you that you’ll probably still wind up losing. Before you even have time to ask for an explanation, he tells you that you sued a ‘judgment proof’ debtor.
Winning a lawsuit against a judgment proof debtor is a civil litigant’s worst nightmare. You put all the time and effort into filing a lawsuit, gathering evidence, and making your case in court. But all that goes to waste when you discover that the debtor is judgment-proof. So what does that mean? More importantly, what can be done about a judgment proof debtor?
A Simple Definition
Understanding what a judgment proof debtor is doesn’t require any legal knowledge. The definition is pretty simple: a judgment proof debtor is someone who has no means to pay what is owed and no reasonable expectation of having those means in the future. Collecting from a judgment proof debtor is like getting blood from a stone.
Let’s say you sued one of your deadbeat customers for $50,000 (the outstanding balance on his account) plus interest, late penalties, and your legal fees. It all adds up to a grand total of $60,000. Let us also say that the debtor:
- is unemployed
- has no prospects for employment
- does not own any property
- barely has anything in his bank account
- does not have any investments or umbrella insurance.
You basically have no means by which to collect. You cannot garnish his wages because he is not working. He has no property on which you can place a judgment lien. And because he has no reasonable prospects, the hope of you ever getting paid is slim. What can you do?
Throw up Your Hands and Walk Away
Judgment Collectors is a Utah debt collection agency specializing in civil judgments. They say that being faced with judgment proof debtor leaves you a couple of options. The first option is to throw up your hands and walk away. A lot of creditors do just that.
During the discovery process, the creditor finds out that the debtor truly is a deadbeat. He has no assets, no bank account, and no job. A decision is made to not invest time or resources into trying to collect. So instead, the creditor chooses to eat the loss.
Hire a Judgment Collection Agency
A second option is to hire a judgment collection agency like Judgment Collectors. Collection agencies either buy judgments outright or work on contingency. Either way, judgment collection experts may have reason to believe that a debtor isn’t really judgment proof. If that is the case, they also have the tools to prove it.
Collection agencies have the law on their side. That is the first advantage. They can garnish wages and bank accounts, file judgment liens, and even get court orders to seize and sell debtor property. But that’s not all. Collection agencies also have access to a range of tools that can help them uncover hidden assets.
Judgment Collectors once went after debtor that owned an airplane hangar in another state. The debtor never revealed owning the property during the discovery process. By all accounts, he had no means to repay. But once Judgment Collectors made him aware that they found his airplane hangar, he was more than willing to pay up.
Sometimes a debtor really is judgment proof. But other times, it is only a ruse. Hiring a judgment collection agency is one way to sort things out – and possibly get paid, too.