Collecting money judgments is rarely easy regardless of who or what the judgment debtor is. That being said, there are some things that can make collecting against a business more challenging. Businesses are legal entities rather than individuals. And because of that, judgment creditors need to do things a bit differently.
The good news is that a judgment creditor’s rights don’t change just because the judgment debtor is a business. The creditor still has a range of tools at his disposal to collect what he is owed.
5 Key Challenges Creditors Face
It would be nice if all judgment debtors just settled up as soon as their cases were concluded. But since that rarely happens, creditors literally need to be ready for anything. Judgment Collectors is a Utah collection agency that specializes in money judgments. That’s how they approach what they do.
Judgment Collectors is ever cognizant of five key challenges creditors face when attempting to collect from businesses:
- Locating Assets – Like individuals, businesses may move assets around or try to hide them as a way of shielding them against collection. Unfortunately, businesses tend to have more resources to do so.
- Shutting Down – Companies put at-risk from collection efforts might simply shut down to avoid collection. Others could declare insolvency, pleading with a bankruptcy court to discharge their debts.
- Insufficient Information – Creditors often struggle to get complete and accurate information from businesses in a timely manner. They may end up with insufficient information on everything from real property to holdings to business accounts.
- Delay Tactics – Companies have the resources and personnel to delay compliance for as long as possible. They can string creditors along for years.
- Legal Barriers – Our legal system has barriers in place to prevent creditors from abusing their debtors. Businesses tend to have access to lawyers who know how to use these legal barriers to slow down or outright stop collection.
The key difference when trying to collect a judgment against the business is the business’s resources. Companies have an enhanced ability to fight collection compared to individuals who may or may not be able to afford legal advice.
Proven Strategies for Creditors
It can sometimes seem to creditors that they are at a tremendous disadvantage. Trying to collect a money judgment from a business can feel like an impossible task. Yet, success is possible. The key to it is knowing proven strategies and how to effectively implement them.
Here are some of the strategies companies like Judgment Collectors rely on:
- Bank Levies – Many states allow creditors to place bank levies on business assets. A bank levy essentially seizes funds in company accounts through writs of execution.
- Charging Orders – Creditors can also ask the court for charging orders that intercept business income until a judgment is paid off. Partnership distributions would be a good example of the income creditors would intercept.
- Receivables Seizure – The law considers business receivables assets that can be leveraged to pay a judgment. So a judgment creditor could intercept other forms of income, like invoice payments.
- Property Liens – Property liens are always on the table. Judgment creditors can go after commercial real estate and a variety of business assets.
The unfortunate truth is that collecting money judgments from businesses isn’t as easy as it could or should be. The system is such that numerous barriers could create challenges for creditors. But with the right strategies and the help of collection professionals, it is possible to hold a company accountable to a money judgment issued against it. It’s not easy, but it can be done.
