It is often said that winning a judgment is the easiest part of going after a deadbeat debtor. You file a lawsuit, go to court, make your case, and that’s it. You get the judgment, and the debtor is legally obligated to pay you. If you can set up a payment plan, collection might just be possible.
Collection is difficult when a judgment debtor is legitimately judgment-proof. Being judgment-proof means not having the income or assets to pay AND having no prospects of anything changing in the future. But outside of being stuck with a judgment-proof debtor, there are ways to work things out. Payment plans are just one of them.
What a Judgment Accomplishes
If you are new to the whole judgment thing, you should probably understand what a judgment actually accomplishes. A judgment is a court order. It is the result of some sort of court proceeding. It recognizes the legitimacy of the debt and the debtor’s legal obligation to pay. But judgments go no further than that.
Creditors are responsible for collection. They can try to collect on their own or turn the task over to an attorney. Some creditors go so far as to hire judgment collection agencies like Judgment Collectors. Specialized collection agencies whose expertise is judgments tend to stand the greatest chances of getting payment.
Time Is of the Essence
There is something else you should know about judgment collection: time is of the essence. The longer it takes to get the debtor on board, the less likely you will ever see your money. This is yet another reason to try setting up a payment plan right away.
Some states allow judgment creditors to start collection efforts immediately after a case has concluded. Other states require creditors to wait for up to 30 days, giving the debtor time to consider an appeal. One way or another, you should be prepared to offer payment plans as soon as you are legally allowed to begin collection efforts.
Getting a payment plan established right away gets the debtor on board immediately. This increases the chances of them actually following through to pay the debt in full. On the other hand, every day that passes without the debtor on board reduces the chances that any payment will be made.
Make the Plan Reasonable
Negotiating a payment plan with a debtor requires being cognizant of their financial resources. Whatever plan you agree on needs to be reasonable or the debtor might not be able to stick to it. Unfortunately, the temptation to insist on an overly aggressive payment plan can render the entire exercise moot.
The amount to be paid each month needs to fit into the debtor’s budget. It needs to be based on the debtor’s disposable income rather than total income. Otherwise, you are expecting the debtor to pay with money they need to cover living expenses, food, etc.
A Little Is Better Than Nothing
One last thing to consider here is that a little bit is better than nothing at all. The truth of the matter is that the vast majority of judgments are never paid. There are lots of reasons explaining why, but they are not important to this discussion. The point here is that a payment plan gets the ball rolling. It gets some money coming in while the debtor seeks to improve their financial position.
Winning a judgment doesn’t guarantee payment. Should you find yourself on the winning end of a civil case, make every effort to set up a payment plan with the debtor. It represents your best chances of getting paid.
