Judgment Collectors, a Salt Lake City, UT

Following the conclusion of a civil trial resulting in a money judgment being entered against one party, that party is often subjected to what is known as the debtor’s exam. In states where debtor’s exams are not conducted, a similar inquiry – known as interrogatories – can be conducted between the two parties’ attorneys. And more often than not, the focus is squarely on the debtor’s assets.

The experts at Judgment Collectors, a Salt Lake City, UT collection agency that specializes in judgments, say that the focus on assets is not accidental. Assets represent leverage. They represent the best and most motivational collection tool judgment creditors have at their disposal.

Liens, Seizure, and Sale

Judgment creditors want to know about assets in order to inform their decisions about collection efforts. If all goes well and a judgment debtor cooperates, the creditor might be able to work out an agreeable payment plan. An especially lenient creditor might even be willing to accept less if the debtor will make a lump sum payment right away.

Barring those two possible outcomes, judgment creditors may have to look to property to secure payment. There are a couple of ways this could work out:

  1. Property Liens – Most states allow judgment creditors to place property liens on debtor assets. A judgment lien works the same as a mortgage lien, contractors’ lien, etc. Before the debtor can sell or otherwise dispose of the property in question, their debt must be settled.
  2. Seizure and Sale – The states also tend to allow certain types of assets to be seized and sold for payment. Seized assets could include everything from boats to rental properties to vacation homes.

The possibility of either a property lien or seizure and sale is awfully motivating. If you lost a civil lawsuit and knew that your vacation home could be sold to pay the debt, wouldn’t you make every effort to prevent that from happening?

Two Types of Assets

Collection laws in most states categorize assets under two main types: real and personal. Real assets are essentially those related to real estate. Everything from a home to a business property would be considered a real asset. Such assets are the most commonly targeted for payment of an outstanding judgment.

Personal assets are any other assets that are not real estate. Common examples include cars, boats, and jewelry. Although it would be difficult to put a judgment lien on jewelry, it is still possible. Putting judgment liens on boats and cars is somewhat easier. All three types of assets could easily be seized and sold.

Some Assets Are Exempt

If there is any good news here for judgment debtors, it is the fact that some assets are exempt from collection efforts. For example, a small number of states exempt primary residences. If you lived in such a state and owned a home, a judgment creditor couldn’t go after that home.

Other states do not exempt a home entirely, but still offer what is known as a homestead exemption. A homestead exemption would exempt a certain value of a person’s primary residence from collection. Let us arbitrarily say $100k. Even if a home were seized and sold for $150k, the judgment debtor would keep the first $100k. The point of all of this is to say that certain types of assets are very valuable. Property is at the top of the list. During debtor’s exams, judgment creditors want to know about such assets because they offer collection leverage. The law compels judgment debtors to be honest about their assets, though they do not alw

By Aulia