How to Collect a Judgment
Write the debtor a letter., Draft a payment plan., Consider a lump-sum payment., Stay in contact., Threaten to take further action., Renew the judgment., Sell bad debt to a collection agency.
Step-by-Step Guide
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Step 1: Write the debtor a letter.
In it encourage the debtor to pay the debt.
Indicate where the debtor should send the payment and what methods of payment you will accept.
To make collection easier, be open to different methods of payment, e.g., credit card or PayPal.
These might be easier for the debtor.
Some debtors may not have checking accounts.
Think about waiving the interest.
If the debtor thinks the debt is too large, he might not even attempt to make payment.
Some payment is better than none.
Keep careful records of all communications.
Send letters by certified mail, and keep copies of everything you send.
Encourage the debtor to respond by mail, so you will have written record of his communications as well. -
Step 2: Draft a payment plan.
If the debtor can’t pay all at once, draft an installment plan.
The plan could call for regular weekly or monthly payments.
Work with the debtor to come up with a plan he can afford.
Extend the payment schedule if necessary to offset lower weekly or monthly payments.
Set the payment low enough so that the debtor can settle into a regular, consistent habit of making payments.
If the debtor has to keep choosing between paying you and buying groceries, you may not see much money from him. , If the debtor has consistent trouble generating cash flow, you may want to consider accepting a lump-sum payment at a discount.
Large creditors (such as credit card companies) routinely accept less than 50 cents on the dollar if a lump- sum payment is made in cash.
If you do not want to have to monitor the debtor continuously, a lump sum, even after a discount, may be preferable. , If the debtor misses a payment, call to remind him of it.
Be professional about it, but ask why the debtor is struggling to pay.
Phone calls are fine for checking up on the debtor.
However, if you choose to renegotiate the payment plan, be sure to get this in writing. , Some debtors have sufficient funds to pay a judgment but refuse to do so.
To prod him along, warn the debtor that you might seek further action.
In several U.S. states, you can move to have a professional license suspended, such as a real estate or a contractor’s license.
You can also seek to have a driver’s license suspended.
You may not gain much by pushing the debtor into unemployment.
Proceed carefully before seeking to suspend someone’s license. , A judgment expires after a set period of time, typically ten years,although in the U.S. it varies by state.
If the debtor is paying his debt but doing it slowly, you may have to renew the judgment against him before it expires.
Keep an eye on the expiration date.
After expiration a court will no longer help you collect a debt.
Use the appropriate form.
Most courts have pre-printed forms you can file to renew a judgment.
Simply fill in the information and then file it with the court.
If the court does not have pre-printed forms, find a comparable form online and use it as a model.
A sample Application For and Renewal of Judgment form for California is .
Attach a Notice of Renewal of Judgment.
This pre-printed form, too, should be available from the court.
A sample Notice of Renewal of Judgment is here.
You will cause the notice and the Renewal of Judgment to be served on the debtor.
File the motion to renew judgment with the court that issued the initial judgment.
File at least six months before the end of the initial judgment period.It may take you some time to find the debtor.
Serve the debtor by using a process server or the county sheriff. , If you cannot collect on a debt, you may want to hire a collection agency to do it for you.
You also have the option of selling the debt outright to the collection agency.
When a collection agency buys a debt, it may pay you something like 30% of the face value.
If instead you hire the agency to collect, it may charge a fee of 20% to 30% of the face value, with the rest going to you.
In the U.S., you can check with the Better Business Bureau for a list of certified collection agencies. -
Step 3: Consider a lump-sum payment.
-
Step 4: Stay in contact.
-
Step 5: Threaten to take further action.
-
Step 6: Renew the judgment.
-
Step 7: Sell bad debt to a collection agency.
Detailed Guide
In it encourage the debtor to pay the debt.
Indicate where the debtor should send the payment and what methods of payment you will accept.
To make collection easier, be open to different methods of payment, e.g., credit card or PayPal.
These might be easier for the debtor.
Some debtors may not have checking accounts.
Think about waiving the interest.
If the debtor thinks the debt is too large, he might not even attempt to make payment.
Some payment is better than none.
Keep careful records of all communications.
Send letters by certified mail, and keep copies of everything you send.
Encourage the debtor to respond by mail, so you will have written record of his communications as well.
If the debtor can’t pay all at once, draft an installment plan.
The plan could call for regular weekly or monthly payments.
Work with the debtor to come up with a plan he can afford.
Extend the payment schedule if necessary to offset lower weekly or monthly payments.
Set the payment low enough so that the debtor can settle into a regular, consistent habit of making payments.
If the debtor has to keep choosing between paying you and buying groceries, you may not see much money from him. , If the debtor has consistent trouble generating cash flow, you may want to consider accepting a lump-sum payment at a discount.
Large creditors (such as credit card companies) routinely accept less than 50 cents on the dollar if a lump- sum payment is made in cash.
If you do not want to have to monitor the debtor continuously, a lump sum, even after a discount, may be preferable. , If the debtor misses a payment, call to remind him of it.
Be professional about it, but ask why the debtor is struggling to pay.
Phone calls are fine for checking up on the debtor.
However, if you choose to renegotiate the payment plan, be sure to get this in writing. , Some debtors have sufficient funds to pay a judgment but refuse to do so.
To prod him along, warn the debtor that you might seek further action.
In several U.S. states, you can move to have a professional license suspended, such as a real estate or a contractor’s license.
You can also seek to have a driver’s license suspended.
You may not gain much by pushing the debtor into unemployment.
Proceed carefully before seeking to suspend someone’s license. , A judgment expires after a set period of time, typically ten years,although in the U.S. it varies by state.
If the debtor is paying his debt but doing it slowly, you may have to renew the judgment against him before it expires.
Keep an eye on the expiration date.
After expiration a court will no longer help you collect a debt.
Use the appropriate form.
Most courts have pre-printed forms you can file to renew a judgment.
Simply fill in the information and then file it with the court.
If the court does not have pre-printed forms, find a comparable form online and use it as a model.
A sample Application For and Renewal of Judgment form for California is .
Attach a Notice of Renewal of Judgment.
This pre-printed form, too, should be available from the court.
A sample Notice of Renewal of Judgment is here.
You will cause the notice and the Renewal of Judgment to be served on the debtor.
File the motion to renew judgment with the court that issued the initial judgment.
File at least six months before the end of the initial judgment period.It may take you some time to find the debtor.
Serve the debtor by using a process server or the county sheriff. , If you cannot collect on a debt, you may want to hire a collection agency to do it for you.
You also have the option of selling the debt outright to the collection agency.
When a collection agency buys a debt, it may pay you something like 30% of the face value.
If instead you hire the agency to collect, it may charge a fee of 20% to 30% of the face value, with the rest going to you.
In the U.S., you can check with the Better Business Bureau for a list of certified collection agencies.
About the Author
Pamela Hamilton
Dedicated to helping readers learn new skills in lifestyle and beyond.
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